Caroline Ellison, the former co-head of Sam Bankman-Fried's hedge fund and a pivotal witness in his trial on fraud charges tied to the collapse of his FTX cryptocurrency exchange, resumed testifying on Wednesday.
Ellison, the former co-chief executive of Alameda Research, is expected to be on the stand all day. She testified on Tuesday that she was part of a multibillion-dollar conspiracy led by Bankman-Fried to defraud FTX customers, investors and lenders.
She is one of three former members of Bankman-Fried's inner circle who have pleaded guilty to fraud charges and agreed to cooperate with the Manhattan U.S. Attorney's office.
Ellison said the hedge fund took about $10 billion in FTX customer funds to repay its debts and make investments. The fund gained the money through a $65 billion line of credit it had on the exchange, and from funds FTX customers deposited into an Alameda bank account when FTX lacked its own account, she said.
"He described himself as truly risk-neutral," whereas most people saw themselves as risk-averse, she said.
Prosecutors say Bankman-Fried plundered billions in customer funds to prop up Alameda, buy real estate and donate more than $100 million to U.S. political campaigns before FTX declared bankruptcy in November 2022 following a collapse that shocked financial markets and left his reputation in tatters.
Bankman-Fried has pleaded not guilty to two counts of fraud and five counts of conspiracy, and has argued that while he made mistakes running FTX, he never intended to steal funds.
In his opening statement last week, defense lawyer Mark Cohen told jurors to question whether cooperating witnesses like Ellison were putting a new, nefarious spin on old decisions by Bankman-Fried which they had originally agreed with.
Gary Wang, FTX's former technology chief, testified that Bankman-Fried falsely tweeted that FTX was "fine" in November as the exchange faced surging demand for withdrawals. A third cooperating witness, former FTX engineering chief Nishad Singh, is also expected to testify at the trial, which could last up to six weeks.
