SBF Trial – Caroline Ellison’s second day of testimony included Thai sex workers, bribery and private messages with SBF SBF Trial – Caroline Ellison’s second day of testimony included Thai sex workers, bribery and private messages with SBF
Ellison made further ground-breaking revelations about SBF's ambitions and what really happened behind the scenes before FTX collapsed on the second day of her testimony.
3 min read
Updated: Oct. 12, 2023 at 1:20 am UTC
Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.
The sixth day of SBF’s trial mainly revolved around the continued testimony of the prosecution’s key witness, Alameda Research CEO Caroline Ellison.
Much of Ellison’s testimony was about financial documentation and the sister companies’ entangled finances, but the latter half was dedicated to further ground-breaking revelations about SBF’s ambitions and what really happened behind the scenes before FTX collapsed.
Ellison and SBF’s messages
Ellison spoke at length about an $800 million trading loss FTX incurred in 2021 due to a margin system glitch. However, when she confronted SBF about the issue, he insisted that Alameda absorb the loss to keep it off FTX’s records.
The courtroom was also presented with communications between Ellison and SBF from just days before FTX’s bankruptcy declaration. The messages between the two painted a picture of escalating panic surrounding the impending collapse of FTX.
Ellison recalled a particularly tense in-person exchange with SBF at their shared apartment in the Bahamas when SBF accused her of failing to hedge on certain trades sufficiently in early 2022. She described how SBF believed that this alleged oversight by her was the reason for Alameda’s dire financial situation.
Ellison’s legal entanglements with the government were also brought to light, including her guilty plea, the potential sentence of 110 years, and the need for her to compensate victims of FTX’s downfall.
Sex workers and bribes
Ellison testified that in 2021, the Chinese government froze a staggering $1 billion of Alameda’s funds held on crypto exchanges OKX and Huobi as part of an ongoing money laundering investigation.
The former Alameda CEO told the courtroom that one of SBF’s initial plans to retrieve the frozen funds involved accounts created under the identities of Thai sex workers, but it ended up failing. She claimed that former Alameda co-CEO Sam Trabucco was responsible for finding these individuals and their accounts.
SBF did not give up and turned to something even more controversial to gain access to the frozen funds. The most incendiary allegation made by Ellison involved the transfer of between $100 million to $150 million to crypto addresses, which she believes are connected to Chinese officials.
Despite Ellison labeling this as a bribe in her initial statements, Judge Kaplan ordered this comment to be removed from the official record and directed the jury to ignore it.
BlockFi, MBS and Binance
Ellison also briefly recounted SBF’s intentions to acquire BlockFi. She said SBF planned to acquire the defunct lender to transition its assets to FTX and to secure more loans.
There were also mentions of SBF’s ambitions to obtain capital from Snapchat and aspirations of securing funds from Saudi Crown Prince Mohammed Bin Salman to manage Alameda’s soaring debt. However, none of those plans ever bore fruit before FTX collapsed.
The testimony also shed light on SBF’s thorny relationship with Binance and his plans to pit U.S. regulators against the rival exchange to bolster FTX’s foothold in the crypto market.
Judge Kaplan ruled on specific aspects of the case outside the main trial. He expressed reservations about discussing the inadequate cryptocurrency regulations in the U.S., fearing it might confound the jury.
He also restricted the defense from discussing SBF’s significant $500 million investment in Anthropic. However, discussions on charitable donations made using the alleged misappropriated funds were deemed permissible.
Judge Kaplan, seemingly aware of the exhaustive nature of the day’s proceedings, wrapped up the day’s trial slightly ahead of schedule, sensing the need for a refreshed start the next day.
In other news…
SBF’s Anthropic investment stirs controversy in ongoing trial
FTX founder Sam Bankman-Fried’s stake in AI startup Anthropic is under scrutiny as prosecutors aim to block its introduction in court, suggesting it might imply potential compensation for victims.
In the continuing trial, the defense’s request to cross-examine FTX co-founder Gary Wang regarding loan structuring was denied by Judge Lewis Kaplan. The case continues to unfold, with both sides strategically positioning their arguments.
SBF wanted to close Alameda amid controversies
An unpublished post by SBF highlighted that the Fear, Uncertainty, and Doubt (FUD) resulting from Alameda’s association with FTX became overwhelming, making its existence unjustifiable.
While SBF lauded Alameda for its significant contributions to the digital asset space, including supporting projects like Solana and Sushiswap, he said the FUD created by competitors was too much for FTX.
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Author 
Assad Jafri
AJ, a passionate journalist since Yemen's 2011 Arab Spring, has honed his skills worldwide for over a decade. Specializing in financial journalism, he now focuses on crypto reporting.
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In this article
Alameda Research
Alameda Research was once a principal trading firm, operating as an arm of the failed crypto exchange, FTX.
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.
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.