FTX Founder's Trial Reveals Covert Recording: Ex-Affiliate Points Finger at Sam Bankman-Fried

A covert recording surfaced where ex-affiliate Caroline Ellison directly implicated him in using customer deposits, shedding light on alleged financial misappropriation.

Source: Bloomberg/Getty Images. (c) 2022.

NEW YORK — In a shocking turn of events, federal prosecutors have unveiled new evidence in the ongoing trial of Sam Bankman-Fried, the founder of embattled cryptocurrency platform FTX. The evidence includes a covert recording made during an all-hands meeting, in which Caroline Ellison, a former top affiliate and ex-partner of Bankman-Fried, directly implicates him in the alleged misappropriation of FTX customer deposits.

Caroline Ellison Points Blame at Sam Bankman-Fried

The recording was reportedly made by an employee of Alameda Research, a hedge fund helmed by Ellison, in the days leading up to FTX's bankruptcy. According to the court filing, Ellison can be heard discussing the impending bankruptcy and apologizing for the situation. In response to an employee's question about who decided to use FTX customer deposits, Ellison allegedly points the blame towards Bankman-Fried, stating, "Um…Sam, I guess."

Caroline Ellison's Role

Prosecutors argue that this recording adds to the mounting evidence that Bankman-Fried maintained decision-making authority even as Ellison managed Alameda Research. They further plan to introduce a memo authored by Ellison titled "Things Sam Is Freaking Out About," which allegedly outlines bad press and reflections on the alleged scheme between FTX and Alameda. This memo, they contend, reinforces Ellison's role as acting on Bankman-Fried's behalf.

The relationship between Bankman-Fried and Ellison also plays a significant role in the unfolding trial. The two were involved in an on-and-off romantic relationship after Bankman-Fried appointed her as co-CEO of Alameda Research. Bankman-Fried's attorney has not yet responded to requests for comment on the new evidence.

Sam Bankman-Fried faces charges of illegally diverting funds from FTX customers to Alameda. He has pleaded not guilty to eight criminal charges, which include securities fraud and money laundering.

Ellison's Diary Leaked

Initially placed under house arrest with a $250 million bail, Bankman-Fried was recently remanded to a New York prison on charges of witness tampering. This decision was made after he allegedly leaked Ellison's diary entries, constituting a form of witness tampering.

Caroline Ellison, on the other hand, pleaded guilty to wire fraud and money laundering charges in December 2022. Prosecutors have identified her as a crucial witness in the case, along with other colleagues from Alameda. They expect her to provide detailed insight into the events of November 2022, a critical period when FTX faced challenges and customer withdrawals surged.

The trial for Sam Bankman-Fried is scheduled to begin on October 2, where the revelations from this covert recording and other evidence will play a pivotal role in determining the outcome of the case.