
Michael Lewis on Sam Bankman-Fried's rise and fall.
The former FTX executive Caroline Ellison, who was the government's star witness against Sam Bankman-Fried, took the stand Tuesday and accused him of orchestrating fraud at the cryptocurrency exchange.
Last year, Ellison agreed to a deal with prosecutors in which she pleaded guilty to charges including wire fraud, securities fraud and commodities fraud.
While Ellison had formerly run Alameda Research, a sister hedge fund to Bankman-Fried's FTX, the cryptocurrency platform co-founded by Bankman-Fried. He pleaded guilty to a charge of trespassing and agreed to cooperate with federal prosecutors after FTX imploded last year.
Alameda took around $14 billion, some of which we were able to pay back.
Asked to identify Bankman-Fried, Ellison stood and took a while, before finding and confirming his presence in the courtroom. She told the judge she was brief and about 10 minutes long before the judge announced a break for lunch. Ellison's testimony was to resume Tuesday afternoon, he said.
Bankman-Fried, 31, is charged with funneling billions of dollars from FTX to Alameda, allegedly using as much as $10 billion in customer deposits to cover luxury real estate purchases and large political donations. He has pleaded not guilty and faces a possible prison term of more than a century if convicted of federal fraud and money-laundering charges.
The assistant U.S. Attorney, Thane Rehn, said he was looking into a complaint in the U.S. District Court.
FTX collapsed in November during a four-day period, and Bankman-Fried was arrested the following month in the Bahamas.
Ellison was then called to the stand after Gary Wang, FTX co-founder, completed his testimony.
Last week, Wang also pleaded guilty and agreed to cooperate with prosecutors, testified that Bankman-Fried tweeted promises that FTX was in good shape, even as the exchange was unraveling.
The defense is expected to make the case that Bankman-Fried misstepped, but his mistakes were not intentional and don't rise to the level of fraud.
'' t intend to defraud anyone,'' said Mark Cohen, Bankman-Fried's attorney, casting his client as a nerd whose business was taken down in a crypto crash that also demolished other startups.
Bankman-Fried, the son of Stanford Law School professors, has been convicted for more than a month in Brooklyn after his bail was revoked by the judge hearing the case, who ruled he had tried to interfere with witnesses.