Day 6 - October 11, 2023
Caroline Ellison testified about Alameda’s lender repayments, balance-sheet presentations, public assurances, and FTX’s withdrawal shortfall. Cross-examination began, and the court limited China-related evidence and barred proposed Anthropic questioning of Ellison.
Full day summary
1. Caroline Ellison — Direct (Part 2)
Day 6 begins with Caroline Ellison testifying about Alameda's use of FTX customer funds to repay lenders, balance sheets that concealed customer borrowing, disappearing messages, and payments connected to efforts to recover frozen exchange accounts.
Highlights
Caroline Ellison — Directtestimony highlightEllison testified that Alameda lacked enough liquid assets to satisfy recalled loans, that the defendant continued directing repayment, and that she understood those directions to require using FTX customer funds.Caroline Ellison — DirectadmissionEllison testified that she prepared seven alternative balance sheets at the defendant's direction, that alternative 7 concealed FTX customer borrowing and related-party loans, and that he selected it for Genesis.Caroline Ellison — Direct“The intended effect was to make Alameda look less risky than it really was and to hide the fact that we were borrowing around $10 billion from FTX customers.”— Caroline EllisonThis was a direct admission about the intended presentation of alternative 7.Caroline Ellison — Directtestimony highlightDuring testimony about frozen Chinese exchange accounts, the court struck Ellison's initial statement about how they were unfrozen. She later described failed recovery efforts and cryptocurrency payments totaling roughly $100 million to wallet addresses, while saying she did not know the recipient for certain.
3. Caroline Ellison — Direct/Cross (Part 3)
Caroline Ellison's resumed direct examination covered concealed use of FTX customer funds, misleading statements, the November 2022 withdrawal crisis, and her cooperation agreement before cross-examination began with questions about fiat-deposit accounts and transfer tracking.
Direct1377 lines
Caroline Ellison — Direct Resumed Caroline Ellison Danielle R. Sassoon
3 sidebars inside this proceeding
- Limits on Chat Exhibit StatementsThe parties discussed how the jury could consider statements by three participants in a chat exhibit.
- Defendant’s Reactions During TestimonyCounsel disputed whether the defendant was visibly reacting to the witness’s testimony and whether those reactions could affect her.
- Exhibit 39A Admissibility DisputeThe parties disputed whether 23 paragraphs concerning the Alameda-Modulo relationship were relevant or cumulative and whether their probative value was substantially outweighed under Rule 403.
Highlights
Caroline Ellison — Direct Resumedtestimony highlightEllison testified that Sam cultivated images of himself and FTX through reporters, Twitter, appearance, and other public-facing choices. She said the advertised image of FTX as safe and reliable was inaccurate because Alameda had borrowed about $10 billion in customer funds that it could not repay, and she admitted her own arm's-length statement to Bloomberg was misleading.Caroline Ellison — Direct Resumed“Because in 2022 Alameda was borrowing around $10 billion of FTX customer funds that we had no way to repay, meaning that it wasn't a safe place for customers to keep their money.”— Caroline EllisonEllison contrasted FTX's cultivated public image with her understanding of its customer-asset shortfall.Caroline Ellison — Direct Resumedtestimony highlightEllison traced the November 6 withdrawal surge through internal chats and public tweets. She said she knew FTX could not meet all withdrawals, understood that her balance-sheet tweet was intended to provide false reassurance, and described internal estimates of roughly $14 billion borrowed against about $6 billion in liquid assets.Caroline Ellison — Direct Resumed“I mean, I knew that FTX could not meet all withdrawals, but that was a fact that we had tried to conceal in the past, and I was wondering whether I should continue trying to conceal it or just start being honest with people about it once it was becoming evident.”— Caroline EllisonThe statement describes Ellison's knowledge of the withdrawal shortfall and her uncertainty over whether to continue concealing it during the crisis.Caroline Ellison — Direct Resumed“I felt a sense of relief that I didn't have to lie anymore, that I could start taking responsibility and being honest about what I had done, even though I obviously felt indescribably bad about all of the people that were harmed and the people that lost their money, the employees that lost their jobs, people that trusted us that we had betrayed.”— Caroline EllisonEllison described both relief at the end of concealment and remorse for customers, employees, and others harmed.Caroline Ellison — Direct ResumedadmissionEllison admitted seeking a cooperation agreement partly for a more lenient sentence and also to accept responsibility. The admitted agreement reflected guilty pleas to seven crimes, and she connected those pleas to customer funds, false lender balance sheets, and statements aimed in part at FTX investors.Caroline Ellison — CrossconfrontationWhen Cohen suggested that transfers were not tracked before 2022, Ellison answered that Alameda had a system tracking all transfers out of its accounts.
4. Post-Jury Evidentiary and Exhibit Matters
After the jury-facing portion of Day 6, the court resolved one dispute affecting Caroline Ellison's continuing cross-examination, deferred another pending a more specific foundation, and directed counsel to confer about anticipated exhibit disputes.
Highlights
Post-Jury Evidentiary and Exhibit MattersrulingThe court heard competing arguments about Anthropic and portfolio-investing evidence, then granted the government's motion barring the proposed questioning of Ellison while leaving open a later proffer involving another qualified witness.Post-Jury Evidentiary and Exhibit Matters“Yes. The government's motion on this point is granted, period. I'm not ruling now on the question of whether somewhere down the road you want to proffer a witness on this. I'll cross that bridge if, as, and when I get to it.”— Lewis A. KaplanThe court granted the immediate request to restrict the proposed cross-examination while expressly reserving any ruling on a later, properly supported witness proffer.