DOJ accuses SBF of leaking Caroline Ellison’s private diary to taint trial; FTX sues former executives for $1B News ▸ US ▸ FTX ▸ Bankruptcy
DOJ accuses SBF of leaking Caroline Ellison’s private diary to taint trial; FTX sues former executives for $1B
FTX alleged that Sam Bankman-Fried is supporting his defense through a $10 million gift he gave his father in January 2022.
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Updated: Jul. 21, 2023 at 10:53 am UTC
Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.
The U.S. Department of Justice (DOJ) alleged that Sam Bankman-Fried (SBF) released the private diary of Caroline Ellison to reporters from the New York Times, according to a July 20 letter to Judge Lewis Kaplan.
On June 20, the New York Times published Ellison’s private writings detailing her relationship with the disgraced former FTX CEO and how her leadership role at Alameda Research overwhelmed her. The report noted that Ellison’s testimony could be critical in SBF’s trial.
The DOJ argued that SBF released the letter as part of efforts to “interfere with a fair trial by an impartial jury,” adding that the release specifically aimed to “publicly discredit a government witness” and potentially bias the jury against her (“taint the jury pool”).
“In addition to tainting the jury pool, the effect, if not the intent, of the defendant’s conduct is not only to harass Ellison, but also to deter other potential trial witnesses from testifying”
As a result, the authorities want the Judge to limit the extrajudicial statements made by parties and witnesses involved in the case.
FTX files to recover $1B from former top executives
Bankrupt crypto exchange FTX filed a lawsuit to recover more than $1 billion allegedly misappropriated by its former top executives, including SBF, Ellison, CTO Zixiao “Gary” Wang, and Nishad Singh, according to a July 20 court filing.
According to the filing, the defendants breached their fiduciary duties and allegedly misappropriated hundreds of millions of dollars belonging to FTX.
“Defendants abused their control over the FTX Group to commit one of the largest financial frauds in history. Beginning shortly after the inception of the FTX Group, Defendants misappropriated Debtor funds on a continuous basis to finance luxury condominiums, political and ‘charitable’ contributions, speculative investments and other pet projects.”
The filing essentially rehashes the executives’ actions that led to the collapse of FTX, pointing out how they placed their interests above the companies they were managing.
The bankrupt firm claims that the fraudulent transfers made by the top executives were over $1 billion, adding that it might discover additional transfers as the case proceeds.
All the top executives named in this lawsuit, except for SBF, have pleaded guilty to criminal charges brought against them by the U.S. government.
Alleges SBF’s father is funding his defense with the company funds
Meanwhile, FTX claimed that Bankman-Fried is supporting his defense through a $10 million gift he gave his father in January 2022.
According to the lawsuit, SBF illegally ordered the transfer from an FTX US account containing the debtors’ assets to his account on the same exchange. He later transferred this fund to his father’s account.
FTX stated that SBF’s father transferred $6.775 million of this fund to personal accounts at Morgan Stanley and TD Ameritrade, leaving only $3.225 million in his FTX US account. However, the FTX US account balance is left with $2.2 million due to losses on crypto trades.
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Oluwapelumi Adejumo
Oluwapelumi values Bitcoin's potential. He imparts insights on a range of topics like DeFi, hacks, mining and culture, underlining transformative power.
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FTX
FTX is a defunct cryptocurrency exchange, currently in bankruptcy proceedings, that was founded by Sam Bankman-Fried and Zixiao “Gary” Wang in May 2019.
FTX US Derivatives
FTX US Derivatives is a digital currency futures and options exchange and clearinghouse regulated by the US Commodity Futures Trading Commission (CFTC).
Alameda Research
Alameda Research was once a principal trading firm, operating as an arm of the failed crypto exchange, FTX.
Caroline Ellison is the former lead trader and former CEO at Alameda Research.
Sam Bankman-Fried is the former CEO, and co-founder of defunct crypto exchange FTX and Alameda Research.