SBF's Trial Twists and Turns: Did Accounting Firms Refuse to Audit Alameda's Books?

Caroline Ellison, who plays a crucial role in the case against FTX's Founder Sam Bankman-Fried (SBF), faced intense cross-examination by the defense as she testified against her former boss. The trial highlighted complex events that led to the collapse of FTX and Alameda Research.

Ellison, a key witness and SBF's former girlfriend, provided a detailed account of her early days at Alameda, highlighting the exchange's internal accounting practices. One notable point in her testimony, as reported by Coindesk, was Alameda's struggle with accountants. From 2021 to 2022, the hedge fund allegedly engaged with several accounting firms, only to discover that they were unable or unwilling to audit the company's books.

Unveiling Alameda Research's Dynamics and Disputes

These findings emerged during Ellison's questioning by the defense lawyer Mark Cohen. Initially, the responsibility for preparing Alameda's balance sheets rested with FTX's former CEO of Digital Markets, Ryan Salame. However, at some point, Ellison took charge of this task.

This cross-examination of Ellison exposed employee disputes before she joined in 2018. While the exact details of these disputes were unclear during the trial, it was evident that they constituted a significant part of Alameda's operations.

Additionally, Ellison's ambition became a focal point of discussion during her testimony. While she initially viewed herself as lacking ambition in her career, her time at Alameda saw a shift in her outlook. She recounted how SBF's encouragement had spurred her to become more ambitious during her tenure at the company.

Caroline Ellison says she wasn't an ambitious person until she met Sam Bankman-Fried https://t.co/goJUqSSuNd

During the cross-examination, Ellison encountered intense questioning from Mark Cohen, SBF's lawyer, CNBC reported. Cohen's persistent interruptions and requests for sidebar conferences during the hearing drew the attention of Judge Lewis Kaplan. Throughout her testimony, Ellison maintained a demeanor that often avoided eye contact with the defendant, a trend that continued from the previous days of the trial.

Defense Scrutinizes Ellison's Testimony

Ellison's testimony also delved into the working dynamics at Alameda, particularly her collaboration with Sam Trabucco, who served as the Co-CEO until August 2022. Ellison and Trabucco took on the day-to-day responsibilities in the firm as early as 2020. By 2021, SBF's involvement at Alameda had notably reduced, and Ellison took on more of the company's responsibilities.

As Ellison continued her testimony, Cohen subjected the internal account used by FTX to label customer funds deposited into Alameda Research's bank accounts, referred to as [email protected], to thorough scrutiny Reuters reported. SBF had cited this internal labeling issue as a cause of the shortfall of funds before his arrest.

Ellison, a 28-year-old Stanford University graduate, is one of three former members of SBF's inner circle who have admitted guilt to fraud charges and agreed to cooperate with the Manhattan U.S. Attorney's office. Earlier in the trial, Gary Wang, FTX's former Chief of Technology, testified regarding SBF's misleading tweets about the status of the crypto exchange when there was a surge in demand for withdrawals.