Former Alameda Research CEO Caroline Ellison said she and FTX co-founder Sam Bankman-Fried misled lenders about how much the company borrowed from the cryptocurrency exchange.
Ellison revealed her actions in a Dec. 19 hearing in federal court in Manhattan, Bloomberg reported.
“I’m really 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 granted access to a loan facility on FTX.com, the cryptocurrency exchange operated by Mr. Bankman-Fried,” Ellison said. “In practice, this agreement gave Alameda access to an unlimited line of credit without posting collateral, without negative balances, and without being subject to margin calls in FTX.com’s liquidation protocols.”
Bankman-Fried, 30, the disgraced Founder of the crypto exchange, faces multiple indictments by 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 commodity fraud, conspiracy to commit securities fraud, conspiracy to commit money laundering, and conspiracy to commit fraud against the Federal Election Commission and campaign finance violations.
He was released on $250 million bail on Thursday after being arrested in the Bahamas earlier this month.
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Federal prosecutors said he used millions of dollars in client funds to fund a lavish lifestyle through Alameda.
Ellison said that “when Alameda’s FTX accounts had significant negative balances in a particular currency, it meant that Alameda was borrowing funds that FTX’s clients had deposited on the exchange,” according to the Bloomberg report.