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Sam Bankman-Fried- Case Archive
Federal Criminal Trialtrial-daytrial-dayDanielle KudlaNicolas RoosDanielle R. SassoonMark S. CohenChristian R. EverdellChristian DrappiCaroline EllisonZac PrincecrossredirectdirectDay 7 - October 12, 2023Caroline Ellison's cross-examination and redirect addressed her cooperation agreement, Alameda's balance sheets, recalled loans repaid with FTX customer funds, and statements to employees. The court admitted all-hands meeting excerpts, Christian Drappi described Alameda operations and the November meetings, and Zac Prince testified about BlockFi's unpaid Alameda exposure.
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Day 7 - October 12, 2023

Ellison Cross and Redirect, All-Hands Recordings, and BlockFi Lending

Judge Lewis A. Kaplan
7Proceedings
4Pages
3Witnesses
2,633Lines
4Sidebars
Day 7 of 19
Appearing:
Danielle Kudla Nicolas Roos Danielle R. Sassoon Mark S. Cohen Christian R. Everdell Christian Drappi Caroline Ellison Zac Prince

Caroline Ellison's cross-examination and redirect addressed her cooperation agreement, Alameda's balance sheets, recalled loans repaid with FTX customer funds, and statements to employees. The court admitted all-hands meeting excerpts, Christian Drappi described Alameda operations and the November meetings, and Zac Prince testified about BlockFi's unpaid Alameda exposure.

Full day summary

On cross-examination, Caroline Ellison confirmed her guilty pleas, cooperation agreement, potential sentencing exposure, and hope for a government letter describing her assistance. She maintained that Alameda's use of FTX customer funds created an improper advantage and exposed customers to loss, while qualifying her account based on what she knew about disclosures. She also described learning of a fiat-liability bug during a meeting convened over possible insolvency. The correction increased calculated net asset value by several billion dollars, though she said practical solvency still depended on market conditions and liquidity. Ellison acknowledged that a positive employee document did not reflect her private assessment of Alameda and misrepresented her feelings to support morale. On redirect, Ellison testified that Alameda used FTX customer funds to repay recalled open-term loans that had financed venture investments and an FTX equity buyback. She attributed the repayment decision to Bankman-Fried. She also testified that an $850 million FTX loss was transferred to Alameda because Bankman-Fried did not want it appearing on FTX's books, and said Alameda's inability to repay more than $10 billion borrowed from customers was, in her view, the principal cause of FTX's collapse. Ellison said she had concealed Alameda's condition because she feared disclosure would prompt withdrawals and collapse. Outside the jury's presence, the court ruled that government excerpts from Alameda's all-hands meeting could be received at least as Ellison's prior consistent statements. The court rejected one defense excerpt but allowed another to be played after the government's clips. Christian Drappi testified that Bankman-Fried remained in contact with Alameda employees, weighed in on large trades, and retained access to trading data after leaving the CEO title. Drappi recounted Ellison's November statements about the customer-fund shortfall and testified that she identified Bankman-Fried, Gary Wang, Nishad Singh, and herself as knowing about Alameda's use of customer deposits. Six audio excerpts and transcripts were admitted, with the jury instructed that the recordings controlled. On cross-examination, Drappi clarified that he knew Bankman-Fried requested pointer access but did not observe what he accessed, and identified other people who also had access. Zac Prince explained BlockFi's disclosed practice of lending customer-held cryptocurrency and testified that BlockFi began lending to Alameda in 2021, recalled its open-term loans in June 2022, and remained owed approximately $650 million when Alameda filed for bankruptcy. The court permitted consideration of Prince's attribution of BlockFi's bankruptcy to Alameda lending and FTX-platform exposure, but struck the remainder of that answer.

1. Caroline Ellison — Cross/Redirect (Part 4)

Caroline Ellison’s Day 7 testimony continued with cross-examination about her authority, cooperation, risk decisions, and Alameda’s finances, followed by redirect on the use of FTX customer funds and the causes of the November crisis.

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Cross
Caroline Ellison — Cross Caroline Ellison Mark S. Cohen
1789 lines

Ellison's cross-examination tested her cooperation incentive, credibility, and responsibility for Alameda while she reaffirmed concerns about undisclosed customer-fund borrowing, lender balance sheets, accounting failures, and the November 2022 wind-down.

3 sidebars inside this proceeding
  1. Cross-Examination on Alameda DisputeCounsel disputed whether cross-examination could explore the witness's view of an Alameda employee dispute after testimony suggesting the defendant had misled her.
  2. Admissibility of Defense Exhibit 10Counsel disputed whether DX-10 or a selected passage was admissible as a business record, evidence of state of mind, or impeachment concerning Caroline Ellison's role at Alameda.
  3. Question About Terms-of-Service DiscussionsCounsel debated whether the witness could be asked whom she consulted about FTX's terms of service and how those discussions affected her understanding.
Redirect
Caroline Ellison — Redirect Caroline Ellison Danielle R. Sassoon
117 lines

Ellison defended her all-hands account, attributed the customer-fund shortfall to repayment of Alameda's loans, explained disputed financial presentations, and identified unpaid customer borrowing as the main cause of FTX's collapse in her view.

Highlights

Caroline Ellison — Crosstestimony highlightEllison confirmed that she entered a cooperation agreement, pleaded guilty to seven charges carrying a combined maximum of 110 years, and hoped the government would submit a letter that could support a reduced sentence, subject to the judge's discretion.Caroline Ellison — Cross“My understanding is that it's a letter that the prosecution writes to the judge at my sentencing that details the crimes that I've committed, the wrongdoing that I've told them about, and the cooperation and assistance that I've provided in their case.”— Caroline EllisonEllison described the potential sentencing benefit underlying the defense's examination of her cooperation incentive.Caroline Ellison — Crosstestimony highlightEllison described entering a meeting believing Alameda might be insolvent and might need bankruptcy, then learning of a fiat-liability bug that changed its calculated NAV by several billion dollars; she qualified that practical solvency still depended on market conditions and asset liquidity.Caroline Ellison — CrossimpeachmentEllison contrasted her private assessment that Alameda had lost billions and could not repay borrowed customer funds with a more positive employee document, acknowledging that she had misrepresented her true feelings to support morale.Caroline Ellison — Cross“I thought it had done very badly and was now in a very bad position. I thought that we had lost billions of dollars on our positions and that we had borrowed money from FTX customers that we were currently unable to pay back.”— Caroline EllisonEllison stated her private assessment of Alameda, which cross-examination contrasted with her more positive employee communication.Caroline Ellison — Redirecttestimony highlightEllison testified that Alameda's venture investments and Binance equity buyback were financed with open-term loans, and that repaying recalled loans with FTX customer funds caused the shortfall. She said Sam, Gary, Nishad, and she knew of the situation and attributed the repayment decision to Sam.Caroline Ellison — Redirect“I explained that Alameda had made billions of dollars of venture investments and had bought back FTX equity from Binance using open-term loans and that when the loans had been recalled, we had to use or we did use FTX customer funds to repay them, which had caused the shortfall.”— Caroline EllisonEllison directly connected the customer-fund shortfall to repayment of Alameda's recalled loans.Caroline Ellison — Redirect“I never liked misleading my employees. I felt really bad about it, but I felt sort of trapped in the summer of 2022, because I was worried that if I revealed Alameda's actual financial situation to anyone, including our employees, that the news would get out and that people would withdraw their funds from FTX, causing Alameda and FTX to collapse.”— Caroline EllisonEllison admitted misleading employees and described her stated reason for concealing Alameda's financial condition.Caroline Ellison — Redirectevidence eventThe court overruled a defense scope objection concerning Government Exhibit 64. Ellison then testified that a margin-system malfunction caused an $850 million FTX loss that was transferred to Alameda because, she said, Sam did not want the loss on FTX's books where it would look bad to investors.

2. Evidentiary Hearing on All-Hands Meeting Clips

Outside the jury's presence on Day 7, the court considered which clips from an Alameda all-hands meeting could be presented.

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Procedural
Evidentiary Hearing on All-Hands Meeting Clips
110 lines

The court allowed six government all-hands meeting clips at least as prior consistent statements, rejected defense clip 415A-T, and allowed defense clip 415B-T to follow them.

Highlights

Evidentiary Hearing on All-Hands Meeting ClipsrulingThe court ruled that the government could present the all-hands meeting clips at least as Ellison's prior consistent statements and contemplated a limiting instruction.Evidentiary Hearing on All-Hands Meeting Clips“I am going to take it at least as a prior consistent statement.”— Lewis A. KaplanThe court stated the evidentiary basis on which it would receive the government clips.

3. Christian Drappi — Direct/Cross

Christian Drappi described Alameda's leadership and its response to the November 2022 crisis before the defense examined the limits and context of his account.

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Direct
Christian Drappi — Direct Christian Drappi Danielle Kudla
421 lines

Alameda engineer Christian Drappi testified about Bankman-Fried's continuing access and trading influence, recounted Ellison's November 2022 shortfall disclosures, authenticated the all-hands recordings and transcripts, and said he resigned within 24 hours.

1 sidebar inside this proceeding
  1. Foundation and Cumulative Evidence ObjectionThe parties disputed whether a low-level employee’s observations about Sam Bankman-Fried’s control were adequately founded or unnecessarily cumulative corroboration.
Cross
Christian Drappi — Cross Christian Drappi Christian R. Everdell
124 lines

Cross-examination limited Drappi's knowledge of Bankman-Fried's pointer use, identified other possible users, narrowed the audience and tone of Caroline's November remarks, and ended with admission and playback of Defense Exhibit 415B.

Highlights

Christian Drappi — Directtestimony highlightDrappi testified that after Bankman-Fried stepped down as Alameda CEO, he remained in direct contact with employees, weighed in on large trades, and retained access to Alameda trading data and the pointer interface.Christian Drappi — Direct“He maintained direct communication with Alameda employees, he weighed in on a number of large trades, and he still had access to Alameda data.”— Christian DrappiDrappi summarized the three ways he said Bankman-Fried remained involved in Alameda after leaving the CEO title.Christian Drappi — Directtestimony highlightDrappi testified that at the November 9 all-hands meeting Ellison identified Bankman-Fried, Gary Wang, Nishad Singh, and herself as knowing that Alameda used FTX customer deposits to repay its loans.Christian Drappi — Directevidence eventDrappi authenticated six audio excerpts and their transcripts. Both sets were received, and the court instructed that the recordings controlled over any variance in the transcript before the clips were played.

4. Zac Prince — Direct (Part 1)

Zac Prince explained BlockFi's lending business and its exposure to Alameda and FTX, including roughly $650 million still owed when Alameda filed for bankruptcy.

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Direct
Zac Prince — Direct Zac Prince Nicolas Roos
49 lines

Zac Prince explained BlockFi's disclosed crypto-lending model, testified that Alameda owed it approximately $650 million at bankruptcy, and attributed BlockFi's bankruptcy to Alameda lending and FTX-platform exposure before the court struck the remainder of his answer.

Procedural
Post-Session Scheduling Zac Prince
23 lines

Highlights

Zac Prince — Directtestimony highlightPrince testified that Alameda owed BlockFi approximately $650 million when Alameda filed for bankruptcy and that the balance remained unpaid.Zac Prince — Direct“$650 million was the amount that Alameda owed us at the time of their filing.”— Zac PrincePrince quantified BlockFi's outstanding exposure to Alameda at bankruptcy.
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