Former Alameda Research CEO Caroline Ellison said she and FTX founder Sam Bankman-Fried misled lenders about how much the company borrowed from the cryptocurrency exchange.
Ellison disclosed his actions in a Dec. 19 plea hearing in federal court in Manhattan, Bloomberg reported.
“I am truly sorry for what I did. I knew it was wrong,” she said, according to a transcript of the hearing in which she acknowledged the financial ties between her company and FTX.
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“From 2019 to 2022, I was aware that Alameda was accessing a loan facility at FTX.com, the cryptocurrency exchange operated by Mr. Bankman-Fried,” Ellison said. “In practical terms, this arrangement allowed Alameda access to an unlimited line of credit without having to post collateral, without having negative balances and without being subject to margin requirements on FTX.com’s Liquidation Protocol.”
Bankman-Fried, 30, the disgraced founder of the crypto exchange, is facing multiple charges from the Southern District of New York and the Securities and Exchange Commission.
The charges include conspiracy to commit wire fraud, wire fraud, conspiracy to commit commodities fraud, conspiracy to commit securities fraud, conspiracy to commit money laundering, and conspiracy to defraud the Federal Election Commission and commit campaign finance crimes.
He was released Thursday on $250 million bail after his arrest in the Bahamas earlier this month.
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Federal prosecutors said he used millions of dollars in client funds to finance a lavish lifestyle through Alameda.
Ellison said that “if Alameda’s FTX accounts had significant negative balances in any particular currency, it meant that Alameda was borrowing money that FTX’s customers had deposited into the exchange,” the Bloomberg report said.