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During the trial, two trusted associates of Bankman-Fried provided testimony last week, claiming that the FTX executive orchestrated a massive fraud against customers. Adam Yedidia, a college friend and former software developer at FTX, said he resigned after discovering the fraudulent conduct. Gary Wang, FTX's former chief technology officer, who has pleaded guilty to financial crimes, testified that Bankman-Fried stole $8 billion from customers and lied about it publicly.
Ellison, another key witness, revealed that Alameda, an affiliated firm, took out billions of dollars in loans against illiquid Sam Coins. When the crypto markets plummeted, Alameda used customer funds, under Bankman-Fried's direction, to cover the losses. Defense lawyers countered by blaming Ellison for the firms' downfall, alleging her failure to heed Bankman-Fried's warning regarding positioning Alameda for a potential crypto asset price downturn.
Prosecutors dismissed the defense's claims by presenting memos from Ellison warning against risky venture investments. Bankman-Fried started FTX Ventures despite Ellison's reservations, resulting in uncertainty over Alameda's ability to repay loans during a market crash. The relationship between Bankman-Fried and Ellison, both former colleagues at Jane Street Capital, compounded her anxiety about her leadership abilities. Private writings leaked by Bankman-Fried led to the revocation of his bail and his subsequent incarceration.
Ellison admitted to collaborating with Bankman-Fried and others to deceive Alameda's lenders, including doctoring financial statements. Additionally, she allegedly worked covertly to inflate the market price of FTT, a cryptocurrency used by Alameda, in order to improve the firm's financial appearance to lenders. Prosecutors cited Ellison's extensive notes from meetings that discussed Alameda's financial condition and its connection with FTX.
Furthermore, Ellison is expected to shed light on the rapid collapse of the business in November, where customers attempted to withdraw deposits, and Binance, a rival exchange, made a short-lived acquisition bid. In a recorded meeting obtained by prosecutors, Ellison addressed Alameda employees with a tearful explanation.