Ellison Testimony Reveals All: FTX Concealed $800M Loss

Former Alameda Research CEO has revealed how SBF’s FTX crypto exchange concealed $800 million in losses.

Caroline Ellison looking scared whilest burning in flames.
Created by Gabor Kovacs from DailyCoin
  • Ellison spilled more beans on FTX and its embattled founder.
  • She revealed a multimillion-dollar loss cover-up at the exchange.
  • The defense is set to cross-examine Ellison following her testimony.

Former Alameda Research CEO Caroline Ellison took to the witness dock on her second day of testifying against Sam Bankman-Fried (SBF), this time around deposing how FTX covered up a massive loss in 2021 following a margin system malfunction.

The U.S. Department of Justice (DOJ) enlisted Ellison as the prosecution’s star witness in the SBF case after she pleaded guilty to multiple federal charges and agreed to cooperate with the government against the embattled FTX founder in December 2022.

$800 Million BTMX Loss Cover Up

Just moments before the government and the defense swapped the baton for cross-examination, the lead prosecutor, Danielle Sassoon, asked Ellison to elucidate on a multimillion-dollar loss that SBF’s bankrupt crypto exchange sustained while trading BTMX.

Ellison deponed that she knew that in 2021, FTX incurred a massive $800 million loss from its margin system malfunctioning and that the loss was pinned on Alameda to hide it from FTX investors.  

Per Ellison’s testimony, SBF revealed how the loss came by.

“From Sam, I learned that FTX had——that there had been a trader on FTX who had taken a large position in BTMX and withdrawn Bitcoin and other, more liquid currencies from FTX, and that he said that Alameda would have to take on the BTMX and try to sell it, which we did, but ended up selling it at a very large loss,” Ellison stated.

Following this development, Bankman-Fried allegedly reiterated that Alameda had to choke on the loss as “he didn’t want it on FTX’s balance sheet.”

More Losses Shrouded in Secrecy

Although she didn’t quote a specific number, Ellison further revealed that the FTX customer in the $800 million BTMX trade was also trading MobileCoin, a position that she averred led to some losses.

According to Ellison, one month before the inevitable collapse of FTX, the exchange’s internal balance sheet had liabilities of $15.6 billion.

Stay updated on how SBF’s trial went down in the first week:
Unpacking the SBF Trial, Highlights from the First Week

Read how SBF’s legal team countered the DOJ on Anthropic evidence:
SBF’s Legal Team Counters DOJ on Anthropic Evidence

This article is for information purposes only and should not be considered trading or investment advice. Nothing herein shall be construed as financial, legal, or tax advice. Trading forex, cryptocurrencies, and CFDs pose a considerable risk of loss.

Author
Brian Danga

Brian Danga, a Kenyan crypto reporter, is dedicated to delivering breaking news and updates from the cryptocurrency world. With a background as a Web3 writer and project manager, he recognizes the importance of unbiased reporting. Holding an LLB degree from the University of Nairobi, Brian's analytical skills contribute to his accurate news reporting. His personal interests include cooking, watching documentaries, reading, and engaging in intellectual discussions.