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Alameda executive says she’s ‘truly sorry’ for her role in FTX’s collapse


A former executive of a trading company closely linked to FTX says she is ‘truly sorry’ for defrauding customers, investors and lenders by pleading guilty to criminal charges stemming from the exchange’s collapse of cryptocurrency last month.

“I knew it was wrong,” Caroline Ellison, the former executive, told a Manhattan federal judge on Monday as she entered her guilty plea, according to a transcript of the hearing that was not sealed on Friday.

Ms. Ellison, 28, agreed to help federal prosecutors build their case against Sam Bankman-Fried, the disgraced founder of FTX and co-founder of Alameda Research, the trading company that Ms. Ellison had run.

Ms Ellison made a confession that gave insight into how she could be a powerful witness against Mr Bankman-Fried. She said she accepted the decision of Mr. Bankman-Fried and others not to disclose the close relationship between FTX and Alameda, and the decision to divert billions of customer deposits at FTX to repay the loans of ‘Alameda.

“I have agreed with others to borrow several billion dollars from FTX to repay these loans,” Ms. Ellison told Judge Ronnie Abrams of the U.S. District Court for the Southern District of New York.

Ms Ellison said she wanted to apologize to FTX customers and investors and Alameda lenders.

Mr. Bankman-Fried, 30, faces multiple criminal charges stemming from what prosecutors said was a multi-year scheme that defrauded customers, investors and lenders. Authorities say he orchestrated a scheme that diverted billions in customer deposits to fuel Alameda’s business, pay off loans, buy lavish real estate, lend money to FTX executives and bring in dozens millions of campaign contributions.

He was extradited from the Bahamas, where FTX was based, on Wednesday after his arrest there on December 12. A Manhattan federal magistrate approved the release of Mr. Bankman-Fried on Thursday after prosecutors and his legal team negotiated a restrictive bond that requires him to be confined to his parents’ home in Northern California and wear an electronic monitoring bracelet.

On Wednesday evening, as Mr. Bankman-Fried was airlifted to the United States, Damian Williams, the U.S. attorney for the Southern District of New York, announced that Ms. Ellison and another former FTX executive, Zixiao Wang, known as Gary Wang, had both pleaded guilty to fraud charges and was cooperating with the government’s investigation into Mr. Bankman-Fried.

Mr. Wang also pleaded Monday, several hours before Ms. Ellison’s court appearance. Mr Wang told Judge Abrams he knew what he was “doing was wrong”, according to a transcript of the proceedings, which was also unsealed on Friday.

Late Friday, Judge Abrams said she recused herself from any future involvement in the case because Davis Polk & Wardwell, the law firm where her husband is a partner, worked for FTX in 2021. She said that her husband had no involvement in legal representation, but she did so to “avoid any possible conflict or the appearance of a conflict”.

Transcripts of Monday’s guilty pleas also show that prosecutors were concerned about what could happen if Mr. Bankman-Fried learned that his two former executives pleaded guilty and cooperated with the government before he consented to be extradited from the Bahamas.

That same Monday, Mr. Bankman-Fried was should be extradited and repatriated to the United States. But during legal proceedings in the Bahamas, his lawyer said his client was not yet ready to waive the extradition.

Mr Bankman-Fried was then returned to Fox Hill Prison in the Bahamas where he had been held.

The transcript of Ms. Ellison’s plea shows that when her hearing began at 4.30pm, Mr. Bankman-Fried was still in the Bahamas.

At the hearing, with uncertainty over when Mr Bankman-Fried would leave the Bahamas, the government asked Judge Abrams to temporarily seal the transcript of Ms Ellison’s plea and delay its public recording.

“We expected him to consent to the extradition today,” Judge Danielle Sassoon, an assistant U.S. attorney, told Judge Danielle, adding, “There were a few hiccups in the Bahamian courtroom.”

nytimes Gt

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