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Caroline Ellison, who used to be the CEO of Alameda Research, will speak in court against Sam Bankman-Fried in his fraud trial on Tuesday, October 10.
Caroline Ellison, the former CEO of Alameda Research, and sometimes a partner to Sam Bankman-Fried, will testify against him in his upcoming fraud trial on Tuesday, October 10. Bankman-Fried is accused of using money from FTX customers for himself and making risky trades.
Caroline Ellison will testify after Gary Wang, who co-founded FTX and used to be its chief technology officer. In December, Wang admitted to fraud charges. During his testimony on Friday, he said that Sam Bankman-Fried told him to create code that allowed Alameda to use $8 billion of FTX customersâ money without them knowing.
Wang also mentioned that Bankman-Fried wanted special privileges for Alameda at FTX, like being able to have a negative balance and not be forced to sell assets if they lost value. Wang trusted Bankman-Fried and followed his instructions.
FTT Token Controversy
Wang testified that Bankman-Fried told Alameda to use FTX customersâ money to buy FTT, the token used on FTX. Importantly, FTT didnât have any real value outside the FTX platform. Wang said that Bankman-Friedâs goal was to make FTT more popular and valuable by creating fake demand.
But this plan didnât work out well in November 2022 when Alameda used billions of FTT as collateral for loans. This made people worry about whether FTX and Alameda were stable and could pay back their debts. This led other investors, including Binance, which is a competitor to FTX, to sell off a lot of FTT.
Because of these revelations, Binanceâs CEO, Changpeng Zhao, who is a big rival of FTX, said that Binance would sell its $50 million worth of FTT. As a result, the value of FTT dropped a lot, and people who had money in FTX rushed to take it out, like a modern-day digital bank run.
Caroline Ellisonâs Testimony May Impact the Direction of the FTX Trial
Up to this point, the trial has heard from two of Bankman-Friedâs colleagues: Zixiao (Gary) Wang and Adam Yedidia. Wang, who co-founded FTX and used to work for Alameda Research, said that Alameda had some advantages on FTX. He also admitted to knowing about certain tactics used to manipulate the market by both FTX and Alameda.
Ellison will be a witness for the people bringing the case against Bankman-Fried. Her testimony is expected to explain Bankman-Friedâs role in FTX and Alameda Research and how they were connected. She might also share information and stories about things that happened within Alameda Research when she was its CEO.
Ellisonâs testimony is really important in this case. It could either support what Wang and Yedidia said or show something different. Also, her testimony might bring out new evidence or information that could make Bankman-Fried look guilty or clear him of any wrongdoing.
Important:Â Please note that this article is only meant to provide information and should not be taken as legal, tax, investment, financial, or any other type of advice.
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