Former Alameda Research CEO Caroline Ellison testified in the criminal trial of Sam “SBF” Bankman-Fried, shedding light on the collapse of cryptocurrency exchange FTX. Ellison pointed fingers at Binance CEO Changpeng “CZ” Zhao, stating that a single tweet from CZ triggered a chain reaction leading to FTX’s downfall.
The infamous tweet, posted on X (formerly Twitter) on Nov. 6, 2022, announced Binance’s decision to liquidate its holdings of FTX Token (FTT) due to undisclosed revelations. This move prompted a wave of panic among retail investors, causing them to follow suit and withdraw their funds from FTX. The rush led to FTX halting withdrawals and eventually filing for bankruptcy on Nov. 11.
Caroline Ellison: FTX Inability to Repay Loan as Primary Reason for Collapse
Caroline Ellison, while acknowledging CZ’s tweet as a contributing factor, highlighted Alameda’s borrowing of $10 billion from FTX, which it could not repay, as the primary reason for the exchange’s collapse. She revealed that Bankman-Fried directed her to take billions of dollars from FTX without users’ consent, painting a grim picture of the exchange’s internal affairs.
CZ defended himself against accusations, stating that “No healthy business can be destroyed by a tweet.” He countered Caroline Ellison’s claims, pointing to Alameda’s offer to buy Binance’s FTT holdings as the real catalyst for the token’s downfall.
During the trial, Ellison’s testimony also delved into Bankman-Fried’s ambitions, including his desire to become the President of the United States and his efforts to secure backing from influential figures like Saudi Crown Prince Mohammed bin Salman. The trial, which commenced on Oct. 3, continues to unravel intricate details of FTX and Alameda’s operations.
Bankman-Fried, facing seven criminal charges, maintains his plea of not guilty in this trial, expected to conclude in November. Additionally, he is slated to face five more counts in a separate trial scheduled for March 2024.
