Accusations continue to surface regarding the collapse of cryptocurrency exchange, FTX. Caroline Ellison, the ex-CEO of Alameda, has placed the blame squarely on FTX’s co-founder, Sam Bankman-Fried, in her recent statement.
According to Ellison, the issues began in June 2022. Amidst a wider crisis in the cryptocurrency sector, Ellison and Bankman-Fried found themselves staring at a significant deficit in Alameda Research’s balance sheet. FTX, being affiliated with Alameda, had borrowed heavily from the cryptocurrency exchange’s deposits.
This financial misstep potentially jeopardized FTX’s standing with both customers and potential lenders. Ellison predicted that as soon as the borrowing was discovered, the process would quickly spiral out of control, leading to a rapid descent into insolvency.
To mitigate the impending disaster, Bankman-Fried proposed an unconventional solution – create fresh balance sheets. Ellison admitted to generating seven alternative balance sheets, at the behest of Bankman-Fried, in an attempt to conceal Alameda Research’s financial predicament.
The issue, however, did not stop there. Ellison revealed that Bankman-Fried had asked her to employ deceptive practices in a fruitless attempt to save his cryptocurrency empire from crashing. These tactics apparently included manufacturing false balance sheets to obscure the real state of the company’s debts.
For more details, refer to the complete report on Bloomberg Law.