Former Alameda Research CEO Caroline Ellison has told a court that she knows that what she did was wrong and that she’s “truly sorry.”
This is according to a transcript of her plea hearing seen by The New York Times.
28-year-old Ellison apologized before a federal judge in New York, saying that she and her former associates knowingly stole billions of dollars from customers of Sam Bankman-Fried’s FTX exchange and sought to cover it up.
“I am truly sorry for what I did,” Ellison told the court. “I knew that it was wrong.”
Ellison was released on a $250,000 bond after pleading guilty to seven counts on December 19 in the FTX case.
The charges include wire fraud and conspiracy to commit securities fraud, according to her plea agreement. The court unsealed the transcript of her plea hearing on December 22.
Ellison told the court that Alameda had a virtually unlimited borrowing facility in FTX, and that she knew the exchange would need to use customer funds to finance loans to the hedge fund.
She also agreed to keep the two firms’ unusually close relationship hidden from investors and customers.
“I understood that if Alameda’s FTX accounts had significant negative balances in any particular currency, it meant that Alameda was borrowing funds that FTX’s customers had deposited on the exchange,” according to the transcripts.
From July through October, she told the court, Ellison agreed with Bankman-Fried and others to provide “materially misleading financial statements to Alameda’s lenders,” and prepared balance sheets that concealed the extent of Alameda’s borrowing, according to transcripts from plea hearings held on December 19 and recently unsealed.
Ellison has been charged with seven criminal counts, including conspiracy to commit wire fraud and money laundering. She and Bankman-Fried were close business associates who briefly dated.
Bankman-Fried, 30, faces eight criminal charges stemming from a scheme that authorities believe he orchestrated by misappropriating billions in customer deposits to fuel trading at Alameda, pay off loans, buy real estate, lend money to FTX executives, and make millions in campaign contributions.
He was extradited last week from the Bahamas, where FTX was based, after being arrested on December 12. Pictures showed him “chilling” in the American Airlines lounge at JFK Airport before heading to his parents’ home in California on December 22.
