1.Caroline Ellison — Cross/Redirect (Part 4)
1,906 linesUNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK ------------------------------x UNITED STATES OF AMERICA, v. 22 CR 673 (LAK) SAMUEL BANKMAN-FRIED, Defendant. Trial
New York, N.Y. October 12, 2023 9:30 a.m. Before: HON. LEWIS A. KAPLAN, District Judge APPEARANCES DAMIAN WILLIAMS United States Attorney for the Southern District of New York BY: DANIELLE R. SASSOON NICOLAS ROOS DANIELLE KUDLA SAMUEL RAYMOND THANE REHN Assistant United States Attorneys COHEN & GRESSER, LLP Attorneys for Defendant BY: MARK S. COHEN CHRISTIAN R. EVERDELL SRI K. KUEHNLENZ DAVID F. LISNER Also Present: Luke Booth, FBI Kristin Allain, FBI Arjun Ahuja, USAO Paralegal Specialist Grant Bianco, USAO Paralegal Specialist
(Trial resumed; jury present)
JUDGE KAPLAN: The defendant and the jurors all are present, as they have been throughout.
Ms. Ellison, you are still under oath.
Mr. Cohen, you may proceed.
MR. COHEN: Thank you, your Honor. CAROLINE ELLISON, resumed. CROSS-EXAMINATION (cont'd)
BY MR. COHEN:
MR. COHEN: Good morning, Ms. Ellison?
CAROLINE ELLISON: Good morning.
MR. COHEN: I want to just briefly touch on what we were speaking about yesterday?
CAROLINE ELLISON: Yes.
MR. COHEN: That's the difference between the fiat@ account and the info@ account.
MR. COHEN: Now, the fiat account was an account that received fiat dollars, British pounds, so on, correct?
CAROLINE ELLISON: Are you referring to the bank account?
MR. COHEN: Yes. I didn't mean to interrupt.
CAROLINE ELLISON: You're referring to the bank account?
MR. COHEN: Yes.
CAROLINE ELLISON: Which bank account?
MR. COHEN: The Alameda bank account or the North Dimension bank account.
CAROLINE ELLISON: Yes. Alameda and North Dimension both had several bank accounts.
MR. COHEN: Those are the accounts that received the fiat deposits, correct?
CAROLINE ELLISON: Yes. At times they received fiat deposits for at least some FTX customers.
MR. COHEN: Now, explain to us what the term fiat underscore -- FTX underscore fiat referred to.
CAROLINE ELLISON: That referred to Alameda's account on FTX that tracked the fiat deposits that Alameda was receiving in its North Dimension bank accounts.
MR. COHEN: That was on the Alameda account on FTX, correct?
CAROLINE ELLISON: That's right.
MR. COHEN: The info account?
JUDGE KAPLAN: Excuse me. Let's try to clarify a little.
When you talk about the FTX underscore fiat account, are you talking about a bank account or an account on the books and records maintained by FTX, or both?
CAROLINE ELLISON: I was referring to an account on FTX, not a bank account.
JUDGE KAPLAN: Let's try to be clear.
MR. COHEN: You meant a ledger entry, correct?
CAROLINE ELLISON: Yeah.
MR. COHEN: Now, the info@ account was Alameda's account for trading on FTX, the exchange, is that correct?
CAROLINE ELLISON: It was our main account for trading on FTX, yes.
MR. COHEN: Fair enough. It was a main account and it also had sub accounts.
CAROLINE ELLISON: Yes, that's right.
MR. COHEN: And it had about 200 subaccounts?
CAROLINE ELLISON: I don't know the exact number.
MR. COHEN: Ballpark.
CAROLINE ELLISON: Yeah. It had at least dozens of subaccounts, I would say.
JUDGE KAPLAN: Again, just for clarity, the info@ account was an account in the sense of a customer account with FTX, right?
CAROLINE ELLISON: That's correct.
JUDGE KAPLAN: Not a bank account and not a ledger account on somebody's books. Yes?
CAROLINE ELLISON: Yes, that's right.
JUDGE KAPLAN: OK.
MR. COHEN: So when Alameda made trades on the FTX exchange, they would be reflected -- to follow up on your Honor's question, they would be reflected in the info@ account?
CAROLINE ELLISON: Most of our trades, yes. We also do trades on other accounts at various times.
MR. COHEN: And you also did trades on other exchanges?
CAROLINE ELLISON: That's right.
MR. COHEN: Now, I want to go back, Ms. Ellison, to some of the testimony you gave here on Tuesday about sort of the early days. I don't intend to repeat all of it, but there are a few things I would like to go over with you, if that's OK.
CAROLINE ELLISON: Yup.
MR. COHEN: You testified that you joined Alameda in about 2018, is that correct?
CAROLINE ELLISON: That's right.
MR. COHEN: And you testified that sometime after you joined you learned that there had been prior issues at Alameda, correct?
CAROLINE ELLISON: That's right.
MR. COHEN: And you were concerned with the defendant not telling you about them, correct?
CAROLINE ELLISON: Yes, I was.
MR. COHEN: And one of the issues you mentioned was that there had been disputes among the various people at Alameda, correct?
CAROLINE ELLISON: That's right.
MR. COHEN: Is it fair to say, Ms. Ellison, that after you had been at Alameda for a time you came to understand more about what had happened?
CAROLINE ELLISON: Yes, that's fair to say.
MS. SASSOON: Objection. Relevance.
JUDGE KAPLAN: It has been answered. Overruled.
MR. COHEN: Did you come to a view that Sam had been correct about many of the issues he first talked to you about?
MS. SASSOON: Objection. Relevance.
JUDGE KAPLAN: What's the relevance, Mr. Cohen?
MR. COHEN: Your Honor, can we come up to the sidebar?
JUDGE KAPLAN: We are not going -- yes, but we are not going to do this on every question.
MR. COHEN: I would prefer not to.
(Continued on next page)
(At sidebar)
MR. COHEN: It's one more question, first of all.
JUDGE KAPLAN: Always good to know.
MR. COHEN: The implication or the inference that the government sought yesterday in its examination about this topic was that Mr. Bankman-Fried had a pattern of being reckless and deceitful that went back even to the early days of Alameda.
What this witness I believe will answer, certainly if she is consistent with the 3500, is that after she came to understand what had happened, she believed he was right about the dispute.
MS. SASSOON: This information was elicited yesterday or Tuesday from the witness with respect to her relationship with the defendant and his failure to disclose to her the financial state of Alameda when she joined or when she apologized after for concealing from her, not the merits of any underlying dispute that gave rise to Alameda being in a worse financial situation when she arrived which had not been shared with her.
Her view on that situation, whatever view she formed, was formed on hearsay conversations with the defendant, no firsthand knowledge of what actually occurred. It's irrelevant, it's based on hearsay, and the pending question is vague because I think the question was: And what was your view about the things that were talked about. Who even knows what that is referring to.
MR. COHEN: The issue with that proffer is that's not what she elicited. She elicited testimony about a dispute between employees. It wasn't just about the financial situation of Alameda. That just wasn't -- could have been limited that way, but it wasn't.
So we are left with the implication that from jump my client was misleading her about fundamental things that, according to the 3500, when she came to understand it, she didn't believe he was misleading her. That's fair cross, your Honor.
MS. SASSOON: Your Honor, the appropriate way to address that was to make an objection and ask for a limiting instruction that it wasn't being offered for the truth. To now get into the underlying merits of that dispute and any view she formed based on self-serving hearsay statements from the defendant is irrelevant and based on hearsay.
MR. COHEN: Your Honor, we are not limited to the government's theory of the case. We are allowed to put on a defense. We are allowed to cover topics that have been covered before and to put our view of what happened across.
I have to say, I can't think of a trial I've done where we are being told we have to limit our cross to only what was on the direct.
JUDGE KAPLAN: I can't think of that actually occurring in this case.
MR. COHEN: Then I withdraw that remark.
JUDGE KAPLAN: And properly so.
I will allow the one additional question and the question pending, but that's it.
MR. COHEN: That's all I wanted to do.
JUDGE KAPLAN: All right.
(Continued on next page)
(In open court)
MR. COHEN: Would you read the question back, please. yes, sure.
(Record read)
CAROLINE ELLISON: Yes, I did come to that view.
MR. COHEN: Now, on Tuesday you gave us your views -- some of your views about Mr. Bankman-Fried. I want to just talk about a few of them. You described him to us. You told us he was ambitious and driven.
Do you recall that, Ms. Ellison?
CAROLINE ELLISON: Yeah. At least I recall saying that he was ambitious, but I would also agree that he was driven.
MR. COHEN: We can stay with ambitious. He worked very hard?
CAROLINE ELLISON: Yes.
MR. COHEN: You worked very hard?
CAROLINE ELLISON: Yes, I did.
MR. COHEN: Gary and Nishad also worked very hard?
CAROLINE ELLISON: Yes. I agree with that.
MR. COHEN: You were all ambitious in your way, correct?
MS. SASSOON: Objection. Form.
MR. COHEN: Were you ambitious, Ms. Ellison?
JUDGE KAPLAN: Overruled.
CAROLINE ELLISON: I didn't think of myself as ambitious before I started at Alameda, but I think I became more ambitious as Sam encouraged me in that.
MR. COHEN: After all, you and Sam and Gary and Nishad built two companies within three years, correct?
CAROLINE ELLISON: That's right.
MR. COHEN: And prior to 2022, both of those companies were worth billions of dollars, correct?
CAROLINE ELLISON: Yes.
MS. SASSOON: Objection.
JUDGE KAPLAN: Sustained.
MR. COHEN: You also told us, Ms. Ellison, on Tuesday that you had -- you come to a view, based on your interactions with Sam, about his view of risk.
You recall that testimony?
CAROLINE ELLISON: Yes, I do.
MR. COHEN: Would it be fair to say that when it came to risk, business risk, you were more conservative than he was.
CAROLINE ELLISON: Yes, that's fair to say.
MR. COHEN: In your view, he was willing to take more business risk than you were?
CAROLINE ELLISON: Yes, that's right.
MR. COHEN: Did you have a view about Gary's willingness to take risks from a business perspective?
MS. SASSOON: Objection. Foundation.
JUDGE KAPLAN: Sustained.
MR. COHEN: Based on your interaction -- let me back up. How long did you know Gary for?
CAROLINE ELLISON: I met him when I started at Alameda, so in 2018.
MR. COHEN: Based on your interactions with Gary, did you come to a view about his views about risk?
CAROLINE ELLISON: I don't think I ever had a very clear impression of what his views on risk were.
MR. COHEN: Let's go back to your views of Sam. Is it fair to say, Ms. Ellison, that sometimes he took risks that you would not have taken?
CAROLINE ELLISON: Yes, that's right.
MR. COHEN: For example -- let me rephrase. Do you recall, in 2019, when Alameda was already established, Mr. Bankman-Fried wanted to start FTX?
CAROLINE ELLISON: Yes, I do.
MR. COHEN: And you didn't think that was a good idea?
CAROLINE ELLISON: That's right.
MR. COHEN: You thought that FTX might have problems getting customers, for example?
CAROLINE ELLISON: Yes, I did.
MR. COHEN: And that it might be a waste of time to start it?
CAROLINE ELLISON: Yes.
MR. COHEN: That was one way in which you and he differed on the risk around starting FTX?
CAROLINE ELLISON: Yes, that's right.
MR. COHEN: Do you recall there was some testimony I think on Tuesday and also Wednesday you gave about a token call -- not a token. About Solana.
CAROLINE ELLISON: Yes, that's right.
MR. COHEN: What was Solana, just to remind us all?
CAROLINE ELLISON: Solana was a Blockchain that Alameda built a token called Serum on and it was also a coin that Sam wanted to invest in.
MR. COHEN: You recall that, in your view, Solana at the time was not a good investment?
CAROLINE ELLISON: I don't recall my exact view. I definitely recall that I was less excited about investing in Solana than Sam was.
MR. COHEN: Fair enough.
And you were not excited about him buying it for one dollar, correct?
CAROLINE ELLISON: I don't remember having an opinion on the one dollar price. I do remember that there was a swap of Solana for Serum that I was against because I thought it involved selling Serum at too low of a price relative to Solana.
MR. COHEN: Is it fair to say that over time, when you looked back, sometimes your view of risk was correct compared to his?
CAROLINE ELLISON: Yeah.
MR. COHEN: And sometimes his view of risk was correct compared to yours?
CAROLINE ELLISON: Yeah. I think that's right.
MR. COHEN: Now, you spoke, I think, Tuesday and also yesterday about the fact that at times the job at Alameda could be very stressful, is that correct?
CAROLINE ELLISON: Yes, I did.
MR. COHEN: Now, would you agree with me that you and Sam had different ways of reacting to stress?
CAROLINE ELLISON: Yeah, I think so.
MR. COHEN: Now, you also told us Tuesday, and I think yesterday, you talked to us about Sam's interaction with the media.
Do you recall that, ma'am?
CAROLINE ELLISON: Yes, I do.
MR. COHEN: To contrast your styles, you were more of a behind-the-scenes, not-be-out-in-the-media person?
CAROLINE ELLISON: That's right.
MR. COHEN: That was your business style?
CAROLINE ELLISON: Yeah.
MR. COHEN: His business style was to be more out in the media, more in the public attention?
CAROLINE ELLISON: Yes, that's right.
MR. COHEN: In and of itself, you didn't think there was anything wrong with that?
MS. SASSOON: Objection.
JUDGE KAPLAN: What's the objection?
MS. SASSOON: Her view of whether there was anything wrong with that.
JUDGE KAPLAN: Sustained.
MR. COHEN: Now, you testified, I think it was Tuesday, maybe it was Wednesday, that, in your view, Mr. Bankman-Fried also had a certain personal style in terms of the kind of clothing he wore, correct?
CAROLINE ELLISON: Yes.
MR. COHEN: And that was the T-shirts and shorts and so on?
CAROLINE ELLISON: That's right.
MR. COHEN: And that was obviously different from your style?
CAROLINE ELLISON: That's right.
MR. COHEN: And I think you told us that, in your view, this was something being done trying to promote the business of FTX?
MS. SASSOON: Objection. Misstates her testimony.
JUDGE KAPLAN: Sustained.
MR. COHEN: Did you have a view of the style and whether it would promote the business of FTX?
MS. SASSOON: Objection. Relevance.
JUDGE KAPLAN: Overruled.
CAROLINE ELLISON: I don't recall having a strong opinion on whether his style was good or not for FTX. I thought it had some pros and cons.
MR. COHEN: OK. Fair enough.
Let me move forward to some of the other topics you covered on Tuesday. I am not going to go into them in the same detail, but I want to go over a few things.
You came to Alameda in 2018, and I believe you told us your first position was as a trader, is that correct?
CAROLINE ELLISON: Yes, that's right.
MR. COHEN: And that you got the title of CEO or co-CEO in the summer of 2021?
CAROLINE ELLISON: That's right.
MR. COHEN: Let me step back a moment and call your attention to 2022. There is a person we have talked about in the case named Sam Trabucco.
Do you recall that?
CAROLINE ELLISON: Yes.
MR. COHEN: I think for convenience we are all referring to him as Trabucco because there is a lot of Sams.
CAROLINE ELLISON: Yeah.
MR. COHEN: Is it fair to say, ma'am, that, in 2020, you and Trabucco began running Alameda's day-to-day operations on a de facto basis?
CAROLINE ELLISON: I would say, in 2020, Trabucco and I began handling a lot of Alameda's day-to-day business.
MR. COHEN: Mr. Bankman-Fried would check in with you?
CAROLINE ELLISON: Yes, he would.
MR. COHEN: He might tell you things to do?
CAROLINE ELLISON: Yes.
MR. COHEN: But he would also be absent for long periods of time, correct?
CAROLINE ELLISON: There were periods of time when he wasn't paying much attention to Alameda or talking to us much.
MR. COHEN: And he would leave it to you and Trabucco?
CAROLINE ELLISON: Yeah.
MR. COHEN: Can we pull up GX-25B in evidence.
MR. COHEN: You discussed this on your direct, Ms. Ellison. This is an example of some of the Google Docs entry you made, correct?
CAROLINE ELLISON: Yes, that's right.
MR. COHEN: And I believe you told us it was your regular practice to make business-related notes in your Google Docs, correct?
CAROLINE ELLISON: That's right.
MR. COHEN: And 25B is an example of that.
CAROLINE ELLISON: Yes, it is.
MR. COHEN: Can we take that down for a moment and pull up GX-64.
It's a multipage document. Can you please show Ms. Ellison the multiple pages so she can see the whole thing. And go back to the beginning, Brian, when you are done.
MR. COHEN: Quick question. Is this another example, Ms. Ellison, of the kind of business-related notes you would take in the Google documents?
CAROLINE ELLISON: This looks like an update document that I would send to Sam, as opposed to the personal notes I would just keep for myself.
MR. COHEN: This would be to update him on the business of Alameda, correct?
CAROLINE ELLISON: Yes, that's right.
MR. COHEN: And it was your regular practice to keep these kinds of notes as well?
CAROLINE ELLISON: Yes, that's right.
MR. COHEN: Can we now call up just for the witness DX-10 for identification.
MR. COHEN: Take a moment to go through DX-10, Ms. Ellison. You can see the whole document. I just have some preliminary questions for you.
JUDGE KAPLAN: Does this correspond to a tab in the book you have given me?
MR. COHEN: Yes, your Honor. I'm sorry. Tab 5.
JUDGE KAPLAN: Thank you.
CAROLINE ELLISON: Could I see the second page again?
MR. COHEN: Of course.
MR. COHEN: Ms. Ellison, is it fair to say this is another entry in your Google Docs relating to your views on the Alameda and FTX business?
CAROLINE ELLISON: This is a Google Doc that I wrote to share with Alameda employees.
MR. COHEN: It is in connection with your business, correct?
CAROLINE ELLISON: Yes.
MR. COHEN: Was it your regular practice to keep these kinds of documents as well?
CAROLINE ELLISON: I wouldn't say I did this very frequently, but this was addressing some upset feelings that various Alameda employees had.
MR. COHEN: And did it reflect your intent and state of mind at the time relating to that situation with the employees?
MS. SASSOON: Objection. Vague.
JUDGE KAPLAN: Sustained as to form.
MR. COHEN: Did it reflect your intent regarding the business purposes of running the business of Alameda?
MS. SASSOON: Same objection.
JUDGE KAPLAN: Same ruling. Try again.
MR. COHEN: What did it reflect?
CAROLINE ELLISON: It was a message that I wanted to share with Alameda employees to encourage them and improve their morale.
MR. COHEN: And you were sharing it as a CEO of Alameda?
CAROLINE ELLISON: I don't recall if I was CEO already at the time or not.
MR. COHEN: I believe we have a date. I am just looking for the date. Let's see if that helps you, Ms. Ellison.
According to stipulation 2003 as to authenticity, this is a document entitled EV of Alameda, dated July 22, 2021.
Does that help you, ma'am?
CAROLINE ELLISON: Yeah. My recollection is that I wasn't appointed co-CEO until August of 2021. I am not totally sure about that.
MR. COHEN: But it's in connection with your role in Alameda?
CAROLINE ELLISON: With my role in Alameda, yes.
MR. COHEN: Your Honor, we offer DX-10.
MS. SASSOON: Objection. This does not satisfy 803(6) or 803(3) and it's hearsay.
JUDGE KAPLAN: Tell me what you think the 803(6) problem is, please.
MS. SASSOON: Yes, your Honor. You'd like me to explain?
JUDGE KAPLAN: Yes.
MS. SASSOON: Although Ms. Ellison testified that she wrote this while at Alameda, a foundation has not been established that satisfies the four prerequisites of the rule. This document is unlike the others shown to Ms. Ellison. It is not on her to-do list. It's not an update document to the defendant.
JUDGE KAPLAN: A little slower.
MS. SASSOON: It's a document she said she wrote to some of her Alameda employees, which she said she did not do routinely, and in that sense it resembles an email created as part of a business practice which your Honor in DLA Piper said does not alone satisfy 803(6).
JUDGE KAPLAN: And the other rule counsel cited was?
MS. SASSOON: He did not cite 803(3), but one of the sustained questions seemed to gesture at 803(3), and no foundation with respect to this document overall or even a part of it has been established as going to state of mind at this time.
JUDGE KAPLAN: Mr. Cohen.
MR. COHEN: Yes, your Honor.
With respect to the 803(6) ground, as I'm sure counsel is aware, the witness only has to say that it's part of the regular practice. It doesn't have to be done every day or every week or so forth, and I think there is sufficient foundation for that.
With respect to 803(3) it goes to that existing state of mind.
JUDGE KAPLAN: What's the relevance of her then existing state of mind?
MR. COHEN: Your Honor, can we approach?
JUDGE KAPLAN: All right.
(Continued on next page)
(At sidebar)
MR. COHEN: Thank you, your Honor.
A couple of things. There has been a lot of testimony elicited that Ms. Ellison was not running Alameda, that she was just taking instruction from the defendant.
So on the relevancy ground we believe this document shows -- rebuts that. The government is free to argue that it doesn't, but we believe that it does. And as I am sure your Honor knows, we don't have to show that this was done once a week, once a day, so forth. We just have to show there was a regular practice of it.
As to her state of mind, this is a conspiracy case, as I was reminded of by counsel yesterday, and I made an objection to evidence coming in as to her state of mind, and her state of mind as to what her relationship with Mr. Bankman-Fried was, in particular when it came to running Alameda was relevant to the case. The government says she really didn't run it. It's their argument. We would like to put in evidence to show that she did.
MS. SASSOON: I'll start with 803(3) first. That's not an exception to the hearsay rule meant to swallow the rule to put in any past statements by a witness.
This document has a number of assertions, like FTX just raised a $18 billion valuation. How that goes to Ms. Ellison's intent, plan or preparation under 803(3) is beyond me, and that's true with a lot of the statements in this document, and defense counsel has not pointed to anything here that directly goes to Ms. Ellison's then present state of mind or intent under 803(3).
As for 803(6), there are four requirements and it's not just that you created a document in the course of the business. It has to be shown that this type of document was maintained in the regular course of business, that it was a regular practice and it was made in the course of a regularly conducted business activity. I don't think that that foundation has been established. This is more equivalent to an email of encouragement to her employees, as she described it.
And, finally, to the extent that defense counsel said it is being offered to rebut the implication that she was not running Alameda, they haven't said it's being offered as a prior inconsistent statement or to impeach, and to establish that additional questions would have to be asked that would show this to be inconsistent with her testimony.
MR. COHEN: Your Honor, if it will make it easier for the Court, the only passage I'm interested in is this one. I'm interested in all, but primarily this one.
JUDGE KAPLAN: Counsel is referring to the page with the Bates stamp ending in 470, starting with the sentence that reads: The truth is, both have really high upside, and ending with the word often three paragraphs later.
MS. SASSOON: May I respond to this?
JUDGE KAPLAN: Let me just read it.
MS. SASSOON: I believe the witness just testified that there were periods of time where the defendant was not paying attention to Alameda, so I don't think that any of her testimony at this point is inconsistent with this document.
I think it would be appropriate to ask questions to elicit the type of information that's in this document, but I don't think there is an admissible basis at this point for this portion of the document itself, whether to impeach as a prior consistent statement or under the other rules we have been discussing.
MR. COHEN: With respect, she gave the answer. Then she qualified it.
JUDGE KAPLAN: What answer did she qualify?
MR. COHEN: She said that he was absent for long periods of time but that she qualified that she wasn't sure about that, which is inconsistent with this.
MS. SASSOON: I don't remember that testimony.
JUDGE KAPLAN: Nor do I. But the transcript will reflect.
If there is a specific part that you want to offer, let's address that, but at the moment you've offered the whole thing.
MR. COHEN: Just the part that I showed your Honor is fine.
MS. SASSOON: Your Honor, as now explained by the defense, they are trying to offer this for its truth. It certainly would not be admissible under 803(3).
JUDGE KAPLAN: I agree with the last statement. My recollection of the testimony is that this was a document that she created to address what she understood to be some upset feelings at AR and that this was not something she regularly did. Am I mistaken?
MR. COHEN: I think -- as your Honor says, the transcript controls, but I think what she said was that this is not something she did, the kind of thing she did every day or every month, but she did do on a regular basis at Alameda.
JUDGE KAPLAN: Do you agree with that?
MS. SASSOON: No. Mr. Cohen showed her three totally different categories of documents, attempted to conflate the three, and the witness resisted that and said no. This is not like my update docs. This is not like my to-do list. This is something maybe every once in a while I shared with my employees for a specific purpose.
JUDGE KAPLAN: Objection sustained.
MR. COHEN: Thank you, your Honor.
(Continued on next page)
(In open court)
MR. COHEN: Could I have the question read back, question and answer read back from before the colloquy for the Court.
MS. SASSOON: Objection, your Honor. It pertained to a document not in evidence.
MR. COHEN: Before that, before the document was offered.
JUDGE KAPLAN: Then I don't know what you're asking.
The very last question and answer before we wound up in the sidebar was: "Q. But it's in connection with your role in Alameda? "A. With my role in Alameda, yes."
MR. COHEN: Let me continue, Ms. Ellison, with the period in which you and Mr. Trabucco, in 2020 going into 2021, when you were handling day to day for Alameda.
Did you have a view -- did you know Mr. Trabucco?
CAROLINE ELLISON: Yes, I did.
MR. COHEN: Did you have a view of him as a trader?
CAROLINE ELLISON: Yes. I thought he was a very good trader.
MR. COHEN: Did you have a view of how he handled extreme situations?
MS. SASSOON: Objection. Form.
JUDGE KAPLAN: Sustained as to form.
MR. COHEN: From time to time, did you have the opportunity to observe Mr. Trabucco in various situations?
CAROLINE ELLISON: Yes.
MR. COHEN: Did you observe him in situations you considered to be extreme?
MS. SASSOON: Objection. Vague.
JUDGE KAPLAN: I'll allow it.
CAROLINE ELLISON: Yes, I did.
MR. COHEN: And did you form a view of how he handled those?
CAROLINE ELLISON: Yes, I did.
MR. COHEN: What was that?
CAROLINE ELLISON: I thought that he was good under pressure and good at handling extreme trading situations.
MR. COHEN: Now, moving forward to 2021, you and he officially became co-CEOs, I think you said, in the summer of 2021, is that right?
CAROLINE ELLISON: That's right.
MR. COHEN: And then toward the end of that year, is it fair to say that he stopped coming to the office?
CAROLINE ELLISON: Yes, that's right.
MR. COHEN: And he sort of stepped away from handling the job.
CAROLINE ELLISON: That's right.
MR. COHEN: Leaving it to you.
CAROLINE ELLISON: That's right.
MR. COHEN: And he officially resigned as co-CEO in August of 2022, is that correct?
CAROLINE ELLISON: Yes. I recall him resigning sometime around then.
MR. COHEN: I didn't mean to interrupt.
You remained the sole CEO from that point on until November of 2022?
CAROLINE ELLISON: That's correct.
MR. COHEN: During that period did there come a time that the topic of adding another co-CEO came up?
CAROLINE ELLISON: Yes, it did.
MR. COHEN: Who did it come up with?
CAROLINE ELLISON: I believe Sam brought it up.
MR. COHEN: What do you recall about that topic?
CAROLINE ELLISON: When we were talking about the idea of Trabucco stepping down, Sam asked whether we should add Ben Xie, who was the head of trading at Alameda, as co-CEO, and I said that I didn't think it made sense.
MR. COHEN: I think we talked about Ben Xie. That's X-i-e, right?
CAROLINE ELLISON: Yes.
MR. COHEN: He had been a trader at Alameda?
CAROLINE ELLISON: Yes.
MR. COHEN: And the discussion was about whether he would become co-CEO with you?
CAROLINE ELLISON: Yes, that's right. He was already head of trading, I believe.
MR. COHEN: In your view, was it better if you continued as the sole CEO, correct?
CAROLINE ELLISON: Yes, I expressed that.
MR. COHEN: I want to move on to another topic related to the beginning years at Alameda. Actually, it's all the years at Alameda.
I apologize. Let me start again.
I want to go over with some more detail some of your responsibilities as the CEO of Alameda.
MR. COHEN: By, call it, 2021, 2022, about how many employees did Alameda have?
CAROLINE ELLISON: Around 30.
MR. COHEN: And you have mentioned yesterday of course it had traders?
CAROLINE ELLISON: That's right.
MR. COHEN: It had people called settlement people. Can you explain to the jury what that was.
CAROLINE ELLISON: Yes. This was the team that handled things like sending wire transfers or sending cryptocurrency between different accounts.
MR. COHEN: And it also had people called developers?
CAROLINE ELLISON: Yes, that's right, software developers, so they handled the technology side of Alameda.
MR. COHEN: Those were the computer people?
CAROLINE ELLISON: Yes, that's right.
MR. COHEN: And accountants?
CAROLINE ELLISON: Yes. We had one accounting person starting in, I think, 2021 and hired two more junior people in 2022.
MR. COHEN: And during the 2020 to '21 time period, you and Mr. Trabucco and then you managed these employees, correct?
CAROLINE ELLISON: Yes, that's right.
MR. COHEN: I think you told us yesterday that along with Sam you and Sam also determined the trading strategies for Alameda.
MS. SASSOON: Objection. Two Sams, I think.
JUDGE KAPLAN: Sustained.
MR. COHEN: Did you determine the trading strategies for Alameda?
CAROLINE ELLISON: I would say that Sam gave the ultimate direction on what he thought we should do, and then Trabucco and I also made trading decisions for Alameda ultimately deferring to Sam, and of course other traders did as well.
MR. COHEN: You had input into the trading decisions?
CAROLINE ELLISON: Yes, that's right.
MR. COHEN: Did you also deal with matters relating to HR?
CAROLINE ELLISON: Yes. I did things like hiring and firing employees and having meetings with them.
MR. COHEN: Did you also deal with data security for Alameda?
CAROLINE ELLISON: I wouldn't say I dealt much with it directly. That was more the developers.
MR. COHEN: And, to your understanding, what data security issues were dealt with?
CAROLINE ELLISON: Things like keeping our passwords and our API keys secure, preventing people from hacking our systems.
MR. COHEN: Was hacking of the systems a risk to Alameda?
CAROLINE ELLISON: Yes, it was. It happened a few times.
MR. COHEN: It actually happened.
CAROLINE ELLISON: Yes, that's right.
MR. COHEN: Now, coming back to accounting matters, when you first joined Alameda, even before you became CEO, did you, as part of your job, handle accounting matters?
CAROLINE ELLISON: Yes, I did. From not too long after I started at Alameda, Sam asked if I could handle some of the accounting and calculating things like daily trading panels, things like that.
MR. COHEN: You took it on?
CAROLINE ELLISON: That's right.
MR. COHEN: Fair to say no one else wanted to do it?
CAROLINE ELLISON: No one else wanted to at the time. At various times other people did take on some of these responsibilities.
MR. COHEN: Fair enough. But you early on you would hire accounting people and they would leave?
CAROLINE ELLISON: Yes. We did have a few people that we tried to give these accounting responsibilities to, and they found they couldn't or didn't want to handle it.
MR. COHEN: Over the course of your time at Alameda, one of the things you wanted to do was try to improve the accounting systems?
CAROLINE ELLISON: Yeah, definitely.
MR. COHEN: You found it to be a difficult or hard task?
CAROLINE ELLISON: I did.
MR. COHEN: Fair to say there were processes to be built out relating to accounting?
CAROLINE ELLISON: Yeah.
MR. COHEN: Now, I think you testified on Tuesday that another one of your responsibilities was preparing balance sheets. Is that correct?
CAROLINE ELLISON: Yes, that's right.
MR. COHEN: And is it fair to say that, in 2019 or so, Ryan Salame prepared the balance sheets for Alameda?
CAROLINE ELLISON: He did prepare balance sheets for Alameda for some time period. I thought that it was more like 2020 or 2021, but I'm not sure.
MR. COHEN: Regardless of timing, there came a time where you sort of took it over from Mr. Salame?
CAROLINE ELLISON: Yes, that's right.
MR. COHEN: Can you describe for us the process you would go through to prepare a balance sheet in the 2020 and 2021 period.
CAROLINE ELLISON: Yes. There was an automated spreadsheet that had a bunch of macros that would pull data from Alameda's databases, and this would produce a balance sheet. But in practice just running the automated spreadsheet wasn't enough. There was a lot of manual reconciliation that I had to do. So basically looking for discrepancies and fixing mistakes, things like that.
MR. COHEN: So you had to pull the data first, correct?
CAROLINE ELLISON: Yeah.
MR. COHEN: Then you had to manually go in and check for discrepancies?
CAROLINE ELLISON: Yes, that's right.
MR. COHEN: During 2021, you prepared, I guess, four balance sheets, four quarterly balance sheets?
CAROLINE ELLISON: Yes, that's right. I think I also maybe prepared other nonquarterly balance sheets.
MR. COHEN: And then a year-end balance sheet?
CAROLINE ELLISON: That would be one of the quarterly balance sheets.
MR. COHEN: OK. Fine.
Did you regard any of those balance sheets as misleading?
CAROLINE ELLISON: No. Not intentionally so, that I can recall.
MR. COHEN: And those balance sheets were one page?
CAROLINE ELLISON: Yes, that's right.
MR. COHEN: They had summary categories for assets?
CAROLINE ELLISON: That's right.
MR. COHEN: Summary categories for liabilities?
CAROLINE ELLISON: That's right.
MR. COHEN: Then they'd would have retained earnings, correct?
CAROLINE ELLISON: Yes, that's correct.
MR. COHEN: Just for the jury's benefit, retained earnings is synonymous with what we have been calling net asset value, right?
CAROLINE ELLISON: Yes.
MR. COHEN: For NAV?
CAROLINE ELLISON: Yes.
MR. COHEN: And one of the purposes for preparing the balance sheets in 2021 was to send them to various lenders that Alameda had, correct?
CAROLINE ELLISON: That's right.
MR. COHEN: So you would send them these one-page balance sheets on a quarterly basis?
CAROLINE ELLISON: Yes, that's right.
MR. COHEN: Would they ever ask you any questions about them?
CAROLINE ELLISON: Sometimes.
MR. COHEN: Would they ever ask you for additional information?
CAROLINE ELLISON: Yeah, sometimes.
MR. COHEN: And if they did, you would provide it?
CAROLINE ELLISON: Sometimes. Sometimes we said that it wasn't something -- sometimes we said that it wasn't something we could or would provide.
MR. COHEN: Now, I think another one of your responsibilities at Alameda was to interact with the lenders, correct?
CAROLINE ELLISON: Yes, that's right. Eventually, we hired someone to be head of borrowing and lending, so at that point I didn't interact much with lenders directly.
MR. COHEN: That person was Richard Chang, who we talked about yesterday?
CAROLINE ELLISON: Yes, that's correct.
MR. COHEN: And he was head of borrowing and lending?
CAROLINE ELLISON: Yes.
MR. COHEN: And you supervised him?
CAROLINE ELLISON: Yes, that's right.
MR. COHEN: From time to time would you also have direct contact with lenders?
CAROLINE ELLISON: Yes, I would.
MR. COHEN: Now, I just want to ask you something I meant to ask you earlier. One of the ways that Alameda -- let me back up. Who were the owners of Alameda?
CAROLINE ELLISON: Sam was the main owner, and I believe Gary also owed 10 percent of it.
MR. COHEN: There were no outside investors?
CAROLINE ELLISON: That's correct.
MR. COHEN: It was a private company owned by Sam and Gary?
CAROLINE ELLISON: That's right.
MR. COHEN: The way that Alameda got capital was by borrowing from lenders, correct?
CAROLINE ELLISON: That was the primary way, yes.
MR. COHEN: We heard some of the names yesterday, but just to refresh, so it would be lenders like Voyager, Genesis, and I am going to pronounce this wrong. Ledn?
CAROLINE ELLISON: That's right. Those were all lenders to Alameda.
MR. COHEN: So Alameda was a hedge fund that was structured in a way where it got its capital from third-party lenders?
CAROLINE ELLISON: I didn't generally refer to us as a hedge fund. This was a trading firm.
MR. COHEN: That's a better answer.
Did you have a view about this structure?
MS. SASSOON: Objection. Vague.
JUDGE KAPLAN: Overruled.
CAROLINE ELLISON: Do you have anything more specific.
MR. COHEN: Sure. Let me try again, Ms. Ellison.
Did you feel that this structure was proper?
MS. SASSOON: Objection.
JUDGE KAPLAN: Sustained as to form.
MR. COHEN: Did you come to a view about the use of this structure of having third-party lenders?
CAROLINE ELLISON: I thought it was a way for Alameda to get capital and had advantages over some other potential ways, such as have a hedge fund structure with investors in that form.
MR. COHEN: I believe you testified yesterday that you had been an intern at Jane Street?
CAROLINE ELLISON: Yes. As well as a full-time trader there.
MR. COHEN: And Jane Street was a Wall Street firm, trading firm?
CAROLINE ELLISON: Yes, that's right.
MR. COHEN: Did you ever learn about whether Jane Street -- how Jane Street received its capital?
MS. SASSOON: Objection, 401.
JUDGE KAPLAN: I'm sorry. What did you say?
MS. SASSOON: 401.
JUDGE KAPLAN: Sustained.
MR. COHEN: Now, in terms of Alameda's relationship with its third-party lenders -- let me ask this question. What could Alameda do with the funds that it borrowed from the lenders?
CAROLINE ELLISON: We could trade. We could pay expenses.
MR. COHEN: I'm sorry. I didn't mean to interrupt.
CAROLINE ELLISON: No. Sorry. Nothing else.
MR. COHEN: You could use the funds for business purposes?
CAROLINE ELLISON: Yeah.
MR. COHEN: So the lenders didn't restrict the particular business purposes?
MR. COHEN: Your Honor, I'd like to go to what is tab 13 in your binder, DX-155 for identification. I have a hard copy for the witness which, if I can approach, I'll hand to the witness.
JUDGE KAPLAN: You may.
MR. COHEN: I don't have a lot of questions for you about this, ma'am, but just take a look and look through DX-155 for identification.
Do you recognize this document?
CAROLINE ELLISON: Yes, I do.
MR. COHEN: What is it?
CAROLINE ELLISON: This is a master loan agreement between Alameda and Voyager, who is one of our lenders.
MR. COHEN: If you could turn to page 28, ma'am.
Did you sign that document?
CAROLINE ELLISON: Yes, I did.
MR. COHEN: The defense offers Exhibit 155.
MS. SASSOON: No objection.
JUDGE KAPLAN: Received.
(Defendant's Exhibit 155 received in evidence)
MR. COHEN: If you could turn to the first page, Ms. Ellison. You used the first master loan agreement. Could you describe for the jury what that is?
CAROLINE ELLISON: That's a loan agreement between two parties that states the general terms, and then further loans between the two parties would be subject to those terms but might have different details, such as different amounts of currency or interest rates or prepayment dates.
MR. COHEN: Would the idea be that this was a lender you were going to have an ongoing relationship with?
CAROLINE ELLISON: Yes, that's right.
MR. COHEN: First, you did the master loan agreement and then, as you took down additional loans, you'd have additions to that agreement.
CAROLINE ELLISON: Yes, that's right.
MR. COHEN: You can put that to one side, ma'am.
Now I want to talk about something in connection with your job responsibilities. We talked about your responsibilities at Alameda. Now I want to talk briefly about what you did or did not do in regard to FTX. OK?
MR. COHEN: Who was Ramnik Arora?
CAROLINE ELLISON: He was the head of ventures and investor relations at FTX.
MR. COHEN: And did he handle, along with Sam, investments for FTX?
MS. SASSOON: Objection. Foundation.
JUDGE KAPLAN: Lay a foundation.
MR. COHEN: I thought the previous question did, but OK.
MR. COHEN: Did you know Mr. Arora?
CAROLINE ELLISON: Yes, I did.
MR. COHEN: Did you interact with him?
CAROLINE ELLISON: Yes.
MR. COHEN: Based on those interactions, did you have a view of what he did in relation to investors?
CAROLINE ELLISON: Yes. I heard from him that he had a lot of interactions with investors and a lot of fundraising calls.
MR. COHEN: And based on your interactions with Sam, did you have a view about whether he had interactions with investors?
CAROLINE ELLISON: Yes. There were times we shared an office and I heard him having lots of calls with investors.
MR. COHEN: Now, is it fair to say, Ms. Ellison, that from 2019 to 2022, FTX did a number of equity offerings?
CAROLINE ELLISON: Yes. That's accurate.
(Continued on next page)
BY MR. COHEN:
MR. COHEN: And can you explain to the jury what an equity offering is.
CAROLINE ELLISON: That means that FTX was selling shares in the company and investors were buying them, giving FTX, you know, money to spend on expenses or other things.
MR. COHEN: Now you were not involved in preparing any materials for those investors, correct?
CAROLINE ELLISON: Not that I recall.
MR. COHEN: You didn't participate in any presentations made to those investors, correct?
CAROLINE ELLISON: I had a couple of conversations with investors that were sort of as part of a due diligence, but for the most part, no.
MR. COHEN: That was handled by others at FTX.
CAROLINE ELLISON: That's right.
MR. COHEN: Now on Tuesday you were asked some questions about your compensation at Alameda, and I don't want to repeat all of it; I just want to go over a few things.
CAROLINE ELLISON: Mm-hmm.
MR. COHEN: Your salary was $200,000 a year?
CAROLINE ELLISON: That's right.
MR. COHEN: Okay. And I believe there was a system at Alameda called the semester system?
CAROLINE ELLISON: That's right.
MR. COHEN: Can you explain to us what that was.
CAROLINE ELLISON: That means that people would get bonuses twice a year; they could be in the form of either US dollars or equity tokens, some combination of the above.
MR. COHEN: And so semester was six months, six months.
CAROLINE ELLISON: That's right.
MR. COHEN: Okay. And I think you told us that your compensation, your bonus compensation for 2021 was about $20 million, correct?
CAROLINE ELLISON: Yes, that's right.
MR. COHEN: And you'd also had compensation going into the beginning of 2022 of 2 million in US dollars, correct?
CAROLINE ELLISON: I don't recall the exact amount. I thought maybe it was like 3 million for the first half of 2022, but something like that.
MR. COHEN: Okay. Fair enough. Fair enough. And you had an account at FTX where your compensation went into, correct?
CAROLINE ELLISON: That's right.
MR. COHEN: And this account would have your bonuses?
CAROLINE ELLISON: Yes, my bonuses were deposited into this account.
MR. COHEN: It would have the value——it would have tokens you had received?
CAROLINE ELLISON: Yes, that's right.
MR. COHEN: And just to remind everyone, tokens would be things like FTT.
CAROLINE ELLISON: That's correct.
MR. COHEN: Or Serum was another token, correct?
CAROLINE ELLISON: That's right.
MR. COHEN: Is Serum sometimes abbreviated as SRM?
CAROLINE ELLISON: That's right.
MR. COHEN: And I believe you told us that you received equity in FTX.
CAROLINE ELLISON: I did.
MR. COHEN: And equity means ownership.
CAROLINE ELLISON: That's right.
MR. COHEN: Okay. And prior to November 2022, I think you told us that the total value of all these items in your FTX account was around $1 billion.
CAROLINE ELLISON: Yes, that's right.
MR. COHEN: Now you also told us, moving ahead, that during your time at Alameda you had a romantic relationship with Mr. Bankman-Fried; is that correct?
CAROLINE ELLISON: Yes, that's right.
MR. COHEN: And I believe you described it as an on-again, off-again kind of relationship.
CAROLINE ELLISON: That's right, I did.
MR. COHEN: Okay. And just to hit it at a high level, I believe you told us that in 2018 you and he had started to sleep together.
CAROLINE ELLISON: That's right.
MR. COHEN: And then in the summer of 2020 to 2021, you dated for a time?
CAROLINE ELLISON: Mm-hmm.
MR. COHEN: And then in the fall of 2021 to I think you said May 2022, you dated again.
CAROLINE ELLISON: Yeah. I thought maybe it was April, but——
MR. COHEN: Maybe April. Okay.
MS. SASSOON: Your Honor, we've now had several minutes of simply repeating the direct examination.
JUDGE KAPLAN: I understand that. I would like it to——
MR. COHEN: I'm sorry. I can't hear you.
JUDGE KAPLAN: I said I understand that and I'd like you to go on to something else.
MR. COHEN: Yes, mm-hmm.
BY MR. COHEN:
MR. COHEN: After you and Mr. Bankman-Fried broke up for the last time, did it affect your ability to communicate with him?
CAROLINE ELLISON: Yes, it did.
MR. COHEN: Can you describe how that happened.
CAROLINE ELLISON: I——I found it difficult to have in-person, one-on-one conversations with him and so I tried to avoid those and avoid spending much time with him in social settings, but I still continued to have work communications with him over Signal as we always had and continued to have group meetings with him.
MR. COHEN: And this was about May, you said, May of 2022?
CAROLINE ELLISON: I think I said around April.
MR. COHEN: I'm sorry. April.
Is it fair to say at that point you weren't talking outside of work?
CAROLINE ELLISON: We talked sometimes outside of work. I mean, he still——we still lived in the same apartment so it's hard to avoid that entirely.
MR. COHEN: Is it fair that you were only talking inside of work when you needed to?
CAROLINE ELLISON: I don't know if I would say that.
MR. COHEN: Can we call up 3550-28, just for the witness, please. Page 16.
MR. COHEN: Before you look at it, let me just ask a few foundation questions.
Is it fair to say, Ms. Ellison, that you were interviewed many times by the prosecutors in this case?
CAROLINE ELLISON: Yes, that's right.
MR. COHEN: And is it fair to say that you were interviewed on April 3rd——
MS. SASSOON: Your Honor, object. There's been no testimony of a lack of recollection.
JUDGE KAPLAN: Well, there's been no question about refreshment either.
MS. SASSOON: And there's a document up for the witness that we'd object to.
MR. COHEN: We can take the document down for the moment.
I'm sorry. Can we have the prior question and answer read back, please.
JUDGE KAPLAN: Yes. Please.
I can do it for you.
The question is: "Is it fair that you were only talking inside of work when you needed to?"
"A. I don't know if I would say that."
BY MR. COHEN:
MR. COHEN: Okay. Do you recall being interviewed by the prosecutors on April 3, 2023?
CAROLINE ELLISON: I don't recall the exact date, but I recall speaking to him around that time period.
MR. COHEN: And do you recall telling them that you were——as of the last breakup, you were only talking inside of work when you needed to?
CAROLINE ELLISON: Not particularly.
MR. COHEN: Can we now call up 3550-28, page 16.
MR. COHEN: I'm going to call your attention to a specific passage so you don't have to read the whole page.
If you could look at the second paragraph from the bottom, ma'am.
CAROLINE ELLISON: Uh-huh.
MR. COHEN: And the——yeah, those sentences. Read them to yourself. My question is whether it refreshes your recollection as to what you told the prosecutors.
MS. SASSOON: Objection to form.
JUDGE KAPLAN: Overruled as to form, but it's a yes/no question.
MR. COHEN: All right. We can take that down.
MR. COHEN: Now yesterday you told us about a call you had on November 9th on that all hands meeting. Do you recall that, ma'am?
CAROLINE ELLISON: Yes.
MR. COHEN: I'm going to come back to that in a little bit. I'm just raising it now because I'd like to set a time frame.
MR. COHEN: Okay. Could we have the calendar for November 9th pulled up, please.
MR. COHEN: And I believe you told us you had been in Japan on vacation?
CAROLINE ELLISON: The previous week.
MR. COHEN: And then you went to Hong Kong.
CAROLINE ELLISON: That's right.
MR. COHEN: There was an office there that Alameda had?
CAROLINE ELLISON: Yes, it was shared by Alameda and FTX.
MR. COHEN: Okay. And that was the meeting you testified about yesterday at the end of your testimony.
CAROLINE ELLISON: Yes, that's right.
MR. COHEN: Now did you learn, after that meeting, or before or after that meeting, whether or not there was any investigation going on with respect to FTX and Alameda?
CAROLINE ELLISON: I don't recall learning about any investigation before that meeting. I certainly learned of it after that meeting.
MR. COHEN: When did you learn about it?
CAROLINE ELLISON: I don't recall exactly. I mean, it was sometime within the, you know, week or so following that.
MR. COHEN: Okay. Now you returned to the United States on November 11th; is that correct?
CAROLINE ELLISON: Yes, that's right.
MR. COHEN: And you stayed at your parents' house, correct?
CAROLINE ELLISON: That's right.
MR. COHEN: I don't want to say where it is, but we'll just say it's outside New York, correct?
CAROLINE ELLISON: It is not in New York.
MR. COHEN: Okay. And it's in a relatively quiet community.
CAROLINE ELLISON: Yeah.
MR. COHEN: And on November 16th, is it fair to say FBI agents came to your house?
CAROLINE ELLISON: I don't recall the exact date, but I remember them coming sometime around then.
MR. COHEN: How many?
CAROLINE ELLISON: I don't remember the exact number. I think like four or five, maybe.
MR. COHEN: And were you home when they came?
CAROLINE ELLISON: Yes, I was.
MR. COHEN: Were other people in the house?
CAROLINE ELLISON: Yes.
MR. COHEN: Who was that?
MS. SASSOON: Objection, 401, and 403.
JUDGE KAPLAN: Overruled.
CAROLINE ELLISON: My boyfriend was there as well as my mom's cleaner, who came once a week.
MR. COHEN: And the agents had a search warrant.
CAROLINE ELLISON: Yes, that's right.
MR. COHEN: And that permitted them to conduct certain searches in the house, correct?
CAROLINE ELLISON: That's right.
MR. COHEN: Okay. They seized three computers that belonged to your mother?
CAROLINE ELLISON: I remember them seizing at least one computer that belonged to my mother.
MR. COHEN: Did they seize computers that belonged to your boyfriend?
MS. SASSOON: Objection, your Honor. 401 and 403.
JUDGE KAPLAN: No. I'll allow it.
CAROLINE ELLISON: Yes, they did.
MR. COHEN: Okay. And without getting into names, had your boyfriend worked at Alameda and FTX?
CAROLINE ELLISON: Yes, he had.
MR. COHEN: You mentioned that you kept a physical notebook. Do you recall that, ma'am?
CAROLINE ELLISON: Yes.
MR. COHEN: Okay. And I think we looked at some pages from it I want to say yesterday. Do you recall that?
CAROLINE ELLISON: Yes, that's right.
MR. COHEN: Was that notebook also taken by the agents?
CAROLINE ELLISON: Yes, it was.
JUDGE KAPLAN: Mr. Cohen, this was covered almost verbatim previously.
MR. COHEN: Well, I don't think this part was, your Honor. The part about the search warrant was not brought up at all, so——
JUDGE KAPLAN: It certainly was.
MS. SASSOON: Objection. That misstates the record.
JUDGE KAPLAN: It certainly was.
BY MR. COHEN:
MR. COHEN: All right. Now——
JUDGE KAPLAN: Obviously if it's a matter of controversy, cross is appropriate, but you're just repeating it.
MR. COHEN: It goes to credibility, your Honor.
JUDGE KAPLAN: Repeating it goes to credibility.
MR. COHEN: Not repeating it; the topic, of course.
JUDGE KAPLAN: And you've got it already, so let's just move on.
MR. COHEN: Okay. I'll move on.
BY MR. COHEN:
MR. COHEN: Now I believe you testified yesterday that sometime after that you engaged counsel.
CAROLINE ELLISON: It was before that.
MR. COHEN: Okay. And your counsel met with the prosecutors in the case, correct?
CAROLINE ELLISON: That's right.
MR. COHEN: Okay. I think you told us yesterday that one of your goals was to see if you could get a cooperation agreement.
CAROLINE ELLISON: Yes, that's right.
MR. COHEN: And did you have an understanding about whether or not that was on the table?
CAROLINE ELLISON: Yes, my understanding was that there was a potential for me to get a cooperation agreement.
MR. COHEN: And there was also potential that you might not get it.
CAROLINE ELLISON: That's right.
MR. COHEN: And then you had——
MR. COHEN: If we could put up the calendar for December, please.
Is that not in? Can we call up DX 1616 for identification.
JUDGE KAPLAN: I'm sorry. I couldn't make out——
MR. COHEN: I'm sorry. 1616 for identification, your Honor.
JUDGE KAPLAN: Government or defendant's?
MR. COHEN: Defendant's.
JUDGE KAPLAN: Thank you.
MR. COHEN: We offer 1616, which is a calendar of December 2022.
MS. SASSOON: No objection. We just ask that the markings that were applied to the prior calendar be taken off.
JUDGE KAPLAN: All right. 1616 is received without the markings.
(Defendant's Exhibit 1616 received in evidence)
BY MR. COHEN:
MR. COHEN: Now there came a time when you had a series of in-person meetings with the government, correct?
CAROLINE ELLISON: That's right.
MR. COHEN: And that was on December 8th, 12th, 14th, and 15th, correct?
CAROLINE ELLISON: I don't remember the exact dates, but I know it was sometime around then.
MR. COHEN: Does that sound about right to you?
CAROLINE ELLISON: Sure.
MR. COHEN: About how long were those meetings?
CAROLINE ELLISON: A few hours each.
MR. COHEN: And as I understand it, you didn't have a cooperation agreement at that point.
CAROLINE ELLISON: That's right.
MR. COHEN: And you were being interviewed to see if you would qualify for one.
CAROLINE ELLISON: Yes, that's right.
MR. COHEN: And you ended up entering into a cooperation agreement and pleading guilty, correct?
CAROLINE ELLISON: Yes, I did.
MR. COHEN: And that was on December 19th?
CAROLINE ELLISON: Don't remember the exact date, but I know it was sometime in mid-December.
MR. COHEN: Okay. And prior to that was there any back-and-forth about the charges you would plead guilty to?
CAROLINE ELLISON: I believe there was some discussion about the charges.
MR. COHEN: Okay. And I think you told us yesterday that you pleaded guilty——you ended up agreeing in your cooperation agreement to plead guilty to charges relating to conspiracy to commit wire fraud and wire fraud relating to customers.
CAROLINE ELLISON: That's right.
MR. COHEN: Conspiracy to commit wire fraud and wire fraud relating to lenders, correct?
CAROLINE ELLISON: That's right.
MR. COHEN: And conspiracy to commit commodities fraud relating to customers.
CAROLINE ELLISON: That's right.
MR. COHEN: And conspiracy to commit securities fraud with respect to investors.
CAROLINE ELLISON: That's right.
MR. COHEN: And a money laundering count.
CAROLINE ELLISON: Yes, that's right.
MR. COHEN: And for all of those charges you faced a maximum sentence of 110 years of imprisonment.
CAROLINE ELLISON: That's correct.
MR. COHEN: Okay. And as the back-and-forth took place, was it your understanding that in order to be considered for a cooperation agreement you'd have to plead to all seven charges?
CAROLINE ELLISON: Not necessarily.
MR. COHEN: Okay. What was your understanding?
CAROLINE ELLISON: My understanding was that these were the charges that I think the prosecutors suggested but that I should only plead guilty to the ones that I, you know——plead guilty to them if I believed that I was guilty of them.
MR. COHEN: And you ended up pleading to all of those charges, correct?
CAROLINE ELLISON: Yes, that's right.
MR. COHEN: Okay. Now one of the charges, Count Six, related to fraud on investors, correct?
CAROLINE ELLISON: That's right.
MR. COHEN: Was it your understanding as of the period before December 19th that you had not had communications with investors in mind?
MS. SASSOON: Objection, form.
JUDGE KAPLAN: Sustained as to form.
MR. COHEN: What was your understanding as to investors prior to your plea?
MS. SASSOON: Objection, form.
JUDGE KAPLAN: Sustained.
MR. COHEN: What was your understanding with regard to investors?
MS. SASSOON: Objection.
JUDGE KAPLAN: Sustained as to form.
MR. COHEN: Now just one more point on this. I believe you said yesterday, or might have been the day before, that one of the things you were seeking at a cooperation agreement is something called a 5K motion; is that correct?
CAROLINE ELLISON: Yes, that's right.
MR. COHEN: And what is your understanding of that?
CAROLINE ELLISON: 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.
MR. COHEN: And if the prosecution writes such a letter, you can qualify for a potential reduction in your sentence.
CAROLINE ELLISON: Yes, that's right, though it's ultimately up to the judge's discretion.
MR. COHEN: But whether to write the letter is up to the government, correct?
CAROLINE ELLISON: That's right.
MR. COHEN: In your understanding, does it matter how many counts you pled to?
CAROLINE ELLISON: I'm not aware of whether that's taken into account. Like officially, I think it's up to the judge's discretion.
MR. COHEN: So whether you pled to four counts or five or six, you could still qualify.
MS. SASSOON: Objection, form.
JUDGE KAPLAN: Sustained as to form.
MR. COHEN: Could you qualify for a 5K motion if you pled to fewer than seven counts?
MS. SASSOON: Objection, form.
JUDGE KAPLAN: Overruled.
CAROLINE ELLISON: I believe it's up to the government's discretion whether they want to write the letter.
MR. COHEN: So you could still qualify.
CAROLINE ELLISON: Yeah.
MR. COHEN: Now in addition to the four meetings we talked about in December, is it fair to say, Ms. Ellison, that you've had a number of meetings with the prosecutors since then?
CAROLINE ELLISON: Yes, it is.
MR. COHEN: Okay. So you had meetings in January, and that was January 3rd, 20th, and 24th?
CAROLINE ELLISON: Don't remember the exact dates.
MR. COHEN: Sound about right?
CAROLINE ELLISON: Sounds possible.
MR. COHEN: Okay. What about March 14th, April 3rd, April 20?
CAROLINE ELLISON: Again——I'm sorry——I don't remember the dates.
MR. COHEN: Okay. Let me try and do it this way. I don't want to make this a numbers test for you. Is it fair to say you had meetings with the prosecutors in January, March, April, and June?
CAROLINE ELLISON: That sounds right.
MR. COHEN: Is it fair to say you had meetings with them in July?
CAROLINE ELLISON: Probably. I don't remember which exact months I met with them in.
MR. COHEN: Okay. August and September?
CAROLINE ELLISON: Yeah, I believe I met with them in August and September.
MR. COHEN: And October, this month, prior to the trial.
CAROLINE ELLISON: Yes, I did.
MR. COHEN: In total, is it fair to say you've had more than 20 meetings with the prosecutors?
CAROLINE ELLISON: That sounds right, though I don't know the exact number.
MR. COHEN: Okay. And please answer this question, the next question yes or no. Yes or no: Have your attorneys had calls or meetings with the prosecutors without you being present?
CAROLINE ELLISON: Yes.
MR. COHEN: And again, how many of those meetings or calls have they had, to your knowledge?
MS. SASSOON: Objection.
JUDGE KAPLAN: Ground?
MS. SASSOON: I rose before he said "to your knowledge," so I'll withdraw it.
CAROLINE ELLISON: I don't know.
MR. COHEN: You think it was more than 20?
CAROLINE ELLISON: I don't know.
MR. COHEN: Have you had any meetings with the prosecutors this past week?
CAROLINE ELLISON: Yes, I have.
MR. COHEN: When did you meet with them?
CAROLINE ELLISON: I last met with them on Monday.
MR. COHEN: Okay. That was before you gave your direct examination.
CAROLINE ELLISON: That's right.
MR. COHEN: How long was that meeting for?
CAROLINE ELLISON: Maybe like three or four hours.
MR. COHEN: Did they go over the topics we'd be discussing in court?
CAROLINE ELLISON: They asked questions, some of which were questions that ended up being in the direct testimony.
MR. COHEN: And you gave the answers you would give.
CAROLINE ELLISON: Yeah.
MR. COHEN: Okay. Your Honor, I'm about to start a new topic. Would it make sense to take our morning break?
JUDGE KAPLAN: I'm willing to do that. Do you have any idea how long you're going to be?
MR. COHEN: I will know better after the break.
JUDGE KAPLAN: Okay. Fifteen minutes, folks.
COURT CLERK: All rise.
(Recess)
(In open court; jury not present
JUDGE KAPLAN: Okay. Please be seated.
Mr. Cohen, I'm not rushing you, but in almost 30 years, most cross-examinations of cooperators I have seen have ended with what you just did, which is why I asked you how much longer. You don't have to do it that way, but I'm just trying to get an idea of how to schedule this case.
MR. COHEN: Sure. I thought I would mix it up, your Honor.
My goal is to finish the cross today.
JUDGE KAPLAN: Okay.
MR. COHEN: It may trickle over to tomorrow, but that's my goal.
MS. SASSOON: One request we made of the defense, your Honor, was to give us about 30 minutes' notice before it's done, if possible, so that we can make sure that we have a witness here to efficiently use the Court's time.
JUDGE KAPLAN: I'm sure he'll cooperate.
Let's get the jury.
(Continued on next page)
(Jury present)
JUDGE KAPLAN: The defendant and the jurors all are present, as they have been throughout.
Mr. Cohen, you may continue.
MR. COHEN: Thank you, your Honor.
BY MR. COHEN:
MR. COHEN: Ms. Ellison, I'd like to move to a new topic. Actually, it's a topic from this morning, and I realized I forgot to ask you something.
Do you recall giving testimony about Alameda as a customer of FTX?
CAROLINE ELLISON: Yes, I do.
MR. COHEN: And that was in our discussion earlier today about the info@ account.
CAROLINE ELLISON: Yes, that's right.
MR. COHEN: As a customer of FTX, did Alameda enter into terms of service?
CAROLINE ELLISON: Yes, I believe it did.
MR. COHEN: Did you ever review those?
CAROLINE ELLISON: Not that I recall.
MR. COHEN: Please answer the next question yes or no. Did you ever discuss those with anyone?
CAROLINE ELLISON: Yes.
MR. COHEN: Your Honor, may we come up?
JUDGE KAPLAN: Because?
MR. COHEN: I'm thinking of your Honor's pretrial rulings.
JUDGE KAPLAN: Come.
(Continued on next page)
(At the sidebar)
MR. COHEN: If her answer to the question is an attorney, I don't want her to say it in open court without the Court having a chance to rule, so I can come back to this after the break if your Honor would like me to.
JUDGE KAPLAN: Without having a chance to rule on whether she can say the word "attorney"?
MR. COHEN: Yes, yes.
JUDGE KAPLAN: Well, she can say the word "attorney," but it's likely that if you want to know what was said, you're going to have a problem because——
MR. COHEN: No, no. I don't want to know that. I just want to know the who.
MR. ROOS: Well, then that raises the question of the pretrial rulings, which is, merely just saying did you talk to attorneys about this, period, moving on, can give a misleading impression to the jury. I think that goes to your Honor's ruling about specificity.
And I'll just flag one other issue on this, which is, FTX the company has not waived privilege on this issue, so there were various documents they didn't produce, so it's not——
JUDGE KAPLAN: Well, I assumed that was true, which is why I said something to the effect that I assumed it would be a problem.
What's the relevance, standing alone, with whether she discussed it with an attorney?
MR. COHEN: Well, the relevance is what she did. Look, it's the defense's view that this is an important document in the case, and it's relevant whether or not she discussed it with anyone to understand the rights and obligations of Alameda.
MS. SASSOON: She also just testified she never reviewed them.
JUDGE KAPLAN: Yeah.
MR. COHEN: She then testified that she spoke to people about them, and I didn't want to elicit——
JUDGE KAPLAN: What exactly are you trying to elicit from her and why?
MR. COHEN: Sure. I'm trying——if she knows——and obviously I haven't had access to her before. This is inconsistent with her 302s, your Honor, by the way, so——
JUDGE KAPLAN: What exactly do you want to elicit and why?
MR. COHEN: Got it, yeah. What I'm trying to elicit is who she spoke to about it, if it was attorneys, if it was Sam, if it was someone else at the company, and what that did in terms of her understanding of how the terms of service operated, with the exception of attorneys, because of the issues Mr. Roos has raised.
MS. SASSOON: Your Honor, I don't see the relevance. She didn't work at FTX, she didn't have direct access to FTX customers, she didn't review the terms of service, and we're certainly not claiming that Alameda was a victim of the fraud because they accepted the terms of service here.
MR. COHEN: She was the CEO of the company.
JUDGE KAPLAN: Hmm?
MR. COHEN: She was the CEO of the company.
JUDGE KAPLAN: Of Alameda.
MR. COHEN: Of a customer of FTX, so her understanding of how those terms of service worked is relevant.
JUDGE KAPLAN: I'm not sure that would be true in a civil contract case.
MR. COHEN: Well, you asked for a proffer, your Honor.
MS. SASSOON: I still don't understand the relevance whether——
JUDGE KAPLAN: We're not going to do it here.
MR. COHEN: Okay. Thank you.
JUDGE KAPLAN: That ruling relates to only this question.
(Continued on next page)
(In open court)
BY MR. COHEN:
MR. COHEN: I also meant to ask you earlier, in connection with your testimony about Alameda as a customer, have you ever heard the term "Chinese wall"?
CAROLINE ELLISON: Yes, I have.
MR. COHEN: What does it mean to you?
CAROLINE ELLISON: I understand it to refer to the general practice of having information barriers between two parts of a company where there may be conflicts of interest between the two parts.
MR. COHEN: Okay. Were there issues relating to Chinese walls with respect to Alameda and FTX?
CAROLINE ELLISON: Yes, it was a topic we discussed sometimes.
MR. COHEN: Okay. What was discussed?
CAROLINE ELLISON: How much separation we should have between Alameda and FTX in various ways, like whether we should have separate offices or the same office, separate Slack work spaces or the same work space.
MR. COHEN: And what was the——if you know, what was the purpose, from a trading point of view, of having a Chinese wall?
CAROLINE ELLISON: I wouldn't have really said it was from a trading point of view. I would have thought it was more from FTX——sort of the point of view of fairness for FTX customers.
MR. COHEN: What do you mean by that?
CAROLINE ELLISON: What I mean by that is that if Alameda had special privileges on FTX or access to FTX's customer information, that would give Alameda a benefit over other FTX customers.
MR. COHEN: Understood. Okay. Thank you.
Now there was also a lot of testimony about Alameda's role as a market maker for FTX, and I don't plan to repeat all of that, but let me ask you this: Was Alameda——well, was Alameda paid for its role as a market maker?
CAROLINE ELLISON: Not directly, though we did receive special privileges on FTX that I've discussed.
MR. COHEN: Did it receive stipends or rebates?
CAROLINE ELLISON: We did receive market maker, like, fee rebates on some of our trades in accordance with the general fee policy of FTX.
MR. COHEN: Okay. And was that because you were taking risk as a market maker?
CAROLINE ELLISON: Yeah, I think that was one of the reasons.
MR. COHEN: So if you came in and took on a position that no one else wanted to buy, there was a risk you might not be able to trade out of it.
CAROLINE ELLISON: Yes, that's true.
MR. COHEN: I believe you also discussed that as part of its market maker duties, Alameda would help to create a market for new tokens. Do you recall that?
CAROLINE ELLISON: Yes, we would.
MR. COHEN: Can you explain what you mean by that.
CAROLINE ELLISON: If a coin initially listed on FTX that hadn't been trading on FTX before, Alameda would be prepared to hold inventory of this coin, if possible, and put out bids and offers on this coin so that as soon as the market opened, if a customer wanted to come to FTX and trade, they would be able to do so.
MR. COHEN: So if it was coming new to the market, Alameda to buy it in case other customers wanted it.
CAROLINE ELLISON: Potentially either buy or borrow or simply use our line of credit on FTX.
MR. COHEN: Now you also mentioned in connection with Alameda's role as a market maker that Alameda had a line of credit. Do you recall that testimony?
CAROLINE ELLISON: Yes.
MR. COHEN: Okay. And I think you told us that at a certain point your understanding was the line of credit was $65 billion; is that correct?
MS. SASSOON: Objection. Misstates the testimony. There was no such testimony.
MR. COHEN: I'm sorry, your Honor. I didn't hear.
JUDGE KAPLAN: No, I was thinking.
MR. COHEN: Oh, sorry. I'm hanging on every word.
JUDGE KAPLAN: I'm going to overrule the objection, but say to the jury obviously it's your recollection that controls.
Answer the question, please.
CAROLINE ELLISON: I don't recall testifying to any $65 billion amount.
MR. COHEN: Okay. Based on your experience as first a trader and then CEO of Alameda, did you have——based on your experience, what was its typical drawdown on a line of credit prior to June 2022?
CAROLINE ELLISON: I think it was in the——a few-billion-dollar range.
MR. COHEN: So let's talk for a moment about a topic we spoke about yesterday relating to FTT. Do you recall speaking about FTT?
CAROLINE ELLISON: I do.
MR. COHEN: Okay. And just to orient everyone, FTT was an exchange token?
CAROLINE ELLISON: That's right. It was the exchange token of FTX.
MR. COHEN: Okay. Can you explain to the jury what that is.
CAROLINE ELLISON: The——FTX would take a third of its fee revenue and use it to buy the token FTT, meaning that the——a third of the value from this revenue would go to the holders of this token.
MR. COHEN: So FTX was in effect issuing FTT tokens?
CAROLINE ELLISON: I think Alameda was the one who issued the tokens.
MR. COHEN: Correct. But they were supported by FTX because of this program.
CAROLINE ELLISON: That's right. FTX did support them.
MR. COHEN: Did you ever hear the term the "buy and burn" program?
CAROLINE ELLISON: Yes.
MR. COHEN: Is that——does that refer to this policy of FTX buying the tokens?
CAROLINE ELLISON: Yes, it does.
MR. COHEN: Now, if you remember, when was FTT created?
CAROLINE ELLISON: It was in 2019.
MR. COHEN: Okay. And do you know who created it?
CAROLINE ELLISON: I would say Sam created it.
MR. COHEN: Okay. Did you ever hear of the term "white paper"?
CAROLINE ELLISON: Yes.
MR. COHEN: What is your understanding of that term?
CAROLINE ELLISON: It's a document that is published when a token is first created, generally explaining what the token is.
MR. COHEN: Do you know if a white paper was issued with respect to FTT?
CAROLINE ELLISON: Yeah.
MR. COHEN: And was that available on the internet?
CAROLINE ELLISON: Yes, it was.
MR. COHEN: Now I think you mentioned yesterday——and I just wanted to clarify——that you knew of another token called BNB. Do you recall that testimony?
CAROLINE ELLISON: Yes.
MR. COHEN: Can you explain to the jury what that was.
CAROLINE ELLISON: BNB was the exchange token of Binance, so similar to FTT's relationship to FTX.
MR. COHEN: So Binance had issued its own token called BNB.
CAROLINE ELLISON: Yes, that's right.
MR. COHEN: Do you know if there was a white paper about that?
CAROLINE ELLISON: I don't specifically recall one.
MR. COHEN: Now after FTT was issued, was it listed publicly?
CAROLINE ELLISON: Yes, it was, initially on FTX and then eventually on many other exchanges as well.
(Continued on next page)
MR. COHEN: So it was listed on exchanges other than FTX?
CAROLINE ELLISON: That's right.
MR. COHEN: And have you ever heard the term mark-to-market price?
CAROLINE ELLISON: Yes.
MR. COHEN: What's that?
CAROLINE ELLISON: That means valuing an asset at its current market price, so whatever you can currently buy or sell it for on exchanges.
MR. COHEN: After it was listed and traded on other exchanges, did FTT have a mark-to-market price?
CAROLINE ELLISON: Yes, it did.
MR. COHEN: You mentioned yesterday that from time to time Alameda would trade on exchanges other than FTX, correct?
CAROLINE ELLISON: Yes. Most of our trading was on exchanges other than FTX.
MR. COHEN: Would it ever post FTT as collateral on those exchanges?
CAROLINE ELLISON: I don't recall any instances of us doing so.
MR. COHEN: What about in terms of your interactions with lenders, third-party lenders like Genesis or Voyager, would Alameda post FTT as collateral?
CAROLINE ELLISON: Yes, we would.
MR. COHEN: Would they accept it?
CAROLINE ELLISON: Yes.
MR. COHEN: Have you ever heard in the trading field the term a haircut?
CAROLINE ELLISON: Yeah.
MR. COHEN: It has a different meaning than I think we all think of. Can you tell us what it is?
CAROLINE ELLISON: I have heard it used referring to marking down assets to less than their market value.
MR. COHEN: Does liquidity factor into that at all?
CAROLINE ELLISON: One might give a haircut because of an assets liquidity, yeah.
MR. COHEN: So if an asset is worth $100 but it's hard to sell, it might get marked down to $80?
MS. SASSOON: Objection to the term worth.
JUDGE KAPLAN: Yes. Sustained.
MR. COHEN: If an asset trades for $80 it might -- $100, it might get marked down to 80 as a haircut?
CAROLINE ELLISON: Yes, in some contexts.
JUDGE KAPLAN: If an asset trades for $80 --
MR. COHEN: I meant a hundred, your Honor.
JUDGE KAPLAN: Perhaps.
The answer is stricken. You can put a new question.
MR. COHEN: If an asset trades for $100 and it receives a haircut, it might get marked down to $80, for example, just as an example?
CAROLINE ELLISON: Yes. That might happen.
MR. COHEN: Now, you had many interactions with Voyager, Genesis, and the other lenders, correct?
CAROLINE ELLISON: Yes, I did.
MR. COHEN: Do you know if they ever used haircuts when they evaluated FTT?
CAROLINE ELLISON: I don't recall hearing what their internal methodology for valuing FTT was.
MR. COHEN: That's not my question. I'm sorry.
Do you know whether they in fact gave discounts for FTT?
CAROLINE ELLISON: No, I don't.
JUDGE KAPLAN: Excuse me. By gave discounts for FTT, is it correct or incorrect to say what that means is, did they ever value FTT as collateral posted for loans by the lender at less than the mark-to-market price?
CAROLINE ELLISON: Yeah. That's what I understood the question to be asking, and I said I do not know.
JUDGE KAPLAN: Let's go on.
MR. COHEN: Thank you, your Honor.
MR. COHEN: One more trading question. Then we will move on.
Have you ever heard the term buy on the way down?
CAROLINE ELLISON: Yeah. I don't know if I would say it is a term, but I have heard people talking about people buying things on the way down.
MR. COHEN: What does it mean to you?
CAROLINE ELLISON: To me, it means if an asset -- to buy an asset while the price is going down.
MR. COHEN: And the idea is to let it go down further and buy it when the price gets lower.
CAROLINE ELLISON: Sorry. The idea of what?
MR. COHEN: Buying on the way down.
CAROLINE ELLISON: I don't think that's how I would understand it.
MR. COHEN: Give me your understanding.
CAROLINE ELLISON: I guess I wouldn't say I understand buy on the way down as a common trading term, but my understanding would just be sort of the straightforward interpretation of buying something as it is going down.
MR. COHEN: So you are giving us just sort of a lay understanding. It's not a special term to you.
CAROLINE ELLISON: Not that I can think of.
MR. COHEN: Then we will move on.
We talked yesterday and earlier today about another topic. With respect to the fiat, Alameda would receive fiat from customers in its bank accounts or North Dimension accounts.
Do you recall that?
MS. SASSOON: Objection. This has been asked and answered yesterday, today.
JUDGE KAPLAN: Sustained.
MR. COHEN: You came to a view, I believe this is what you told us yesterday, in 2019 or 2020 that you believed that you and Sam were acting improperly with regard to fiat, the fiat account.
Do you recall that, ma'am?
CAROLINE ELLISON: I don't recall saying that with respect to the fiat account.
MR. COHEN: Let me rephrase. I think you told us yesterday that you came to a view that, by 2019, 2020, you and Sam were acting improperly in regard to customer funds.
Do you recall that?
CAROLINE ELLISON: Yes, I do.
MR. COHEN: If you could describe that for us, please.
CAROLINE ELLISON: Yeah. I was saying that I felt that by Alameda having the ability to borrow FTX customer funds and use them for our own trading, without customers being aware of this, that this was an improper advantage that Alameda had on FTX and something that put customers at a disadvantage if Alameda was to lose that money.
MR. COHEN: Was your concern the funds coming into the Alameda account in the first place?
CAROLINE ELLISON: I don't recall being concerned about that.
MR. COHEN: Was your concern about whether or not there was security or collateral with the funds?
MS. SASSOON: Objection. Form.
JUDGE KAPLAN: Sustained as to form.
Rephrase it.
MR. COHEN: What was the basis -- let me rephrase.
Does whether or not there was collateral for the funds weigh into your view?
MS. SASSOON: Objection. Form.
JUDGE KAPLAN: Yeah. Collateral has been used in various ways here, Mr. Cohen, I think.
MR. COHEN: If customer funds were transferred out of Alameda and there weren't Alameda assets to pay for them, was that part of your concern?
CAROLINE ELLISON: Sorry. Can you repeat the question.
MR. COHEN: Can we read that back, please.
(Record read)
MR. COHEN: A. I don't think I know what you mean by customer funds were transferred out of Alameda.
MR. COHEN: Let's use your language, if they were used by Alameda. Was your concern -- did it factor into your concerns as to whether they were in, for example, liquid assets that can be used to pay them back?
JUDGE KAPLAN: I'm sorry. Could you clarify. Customers of whom?
MR. COHEN: Let me try this again.
MR. COHEN: Tell me if I'm wrong, Ms. Ellison. I believe you testified yesterday that you had a concern about Alameda's use of customer funds, is that correct?
CAROLINE ELLISON: Yes, that's right.
MR. COHEN: Tell me if I'm wrong, part of your concern was that the funds were then used for other purposes, like venture investments?
CAROLINE ELLISON: That's right.
MR. COHEN: So did this concern include what happened to those investments?
CAROLINE ELLISON: Yeah. I mean, I would say there was a risk that the investments would go down or go to zero and that risk was part of the reason that I was concerned.
JUDGE KAPLAN: And the customer funds you were talking about were customers of which firm?
CAROLINE ELLISON: I was talking about FTX customer funds.
JUDGE KAPLAN: Thank you.
MR. COHEN: Would you have the same concern if the funds -- if the funds were just to be kept in the account as cash?
CAROLINE ELLISON: No. That would be less concerning or not concerning to me.
MR. COHEN: Now, I think you told us yesterday that you came to these concerns after conversations with Sam, is that correct?
MS. SASSOON: Objection. Misstates the testimony.
JUDGE KAPLAN: I think so. Put it another way, please, Mr. Cohen.
MR. COHEN: No problem, your Honor.
MR. COHEN: What was the basis for your concern?
CAROLINE ELLISON: I would say the basis for my concern was that Alameda was borrowing customer funds and putting them at risk without, to my knowledge, disclosing this to customers.
MR. COHEN: And you discussed this with Sam?
CAROLINE ELLISON: Yes, I did.
MR. COHEN: Did you discuss it with anyone else?
CAROLINE ELLISON: Sorry. What time frame are we talking about?
MR. COHEN: Well, we will make it easy for you. Did it change? Let's start from 2019 to 2020, when you first learned of this.
CAROLINE ELLISON: I don't recall discussing it with anyone else at that time.
MR. COHEN: So let's complete the time frame from then until November 2022.
CAROLINE ELLISON: Yeah. I discussed my concerns about Alameda's use of customer funds with Gary and Nishad as well during that time frame.
MR. COHEN: Did you discuss it with anyone else?
CAROLINE ELLISON: Not that I can recall, no.
MR. COHEN: Now, this was a concern -- hold on.
From 2019 to November 2022, did you ever consider resigning from Alameda?
CAROLINE ELLISON: Yes, I did, on some occasions.
MR. COHEN: In light of these concerns?
CAROLINE ELLISON: Due to a combination of factors.
MR. COHEN: But you didn't resign?
CAROLINE ELLISON: I did not.
MR. COHEN: You told us yesterday that there were certain times when Mr. Bankman-Fried told you to delete Signal chats.
Do you recall that, ma'am?
MR. COHEN: And that in November of 2022, you decided to preserve some of those chats on your own?
CAROLINE ELLISON: I think Sam had also turned off his disappearing messages at that point.
MR. COHEN: Let me ask about you. Did you decide to preserve any messages during the November 2022 time frame we talked about?
CAROLINE ELLISON: Yes. I started turning off disappearing messages in November of 2022.
MR. COHEN: So you would have a record of what happened.
CAROLINE ELLISON: It was because I thought that it was the proper thing to do.
MR. COHEN: Did you do that in any prior time from 2019 to 2022?
CAROLINE ELLISON: Turning off disappearing messages on Signal?
MR. COHEN: Yes. Keeping screenshots.
CAROLINE ELLISON: I don't recall any time I turned off disappearing messages. I think I took screenshots of chats at various points, and I don't remember any specific ones.
MR. COHEN: Now, earlier we talked about the fiat@ account and you mentioned the pointer system.
Do you recall that?
MR. COHEN: Can you just briefly described how that worked?
CAROLINE ELLISON: Pointer was Alameda's internal system that stored data and was a user interface for accessing that data and allowed people to do things like manually trade or move cryptocurrency between different exchanges.
MR. COHEN: With respect to the fiat deposits, were there ever issues with reconciling them?
CAROLINE ELLISON: Yes, definitely.
MR. COHEN: Can you describe that for the jury.
CAROLINE ELLISON: Yes. There were large and increasing over time number of fiat deposits into Alameda's accounts. And they -- at some point Alameda stopped having access to records of all of the deposits, so there was no way for us to compare the balances in the fiat@ account to the records of all the transfers that had been made. We eventually hired an accounting person who went back over the past couple of years of transfers and attempted to reconcile them all and found lots of discrepancies.
MR. COHEN: And one of the things you were looking for was to reconcile what had come in from customers, what funds had come in from customers from what had come in otherwise, correct?
CAROLINE ELLISON: The funds from customers generally went into different bank accounts from our other transfers. I would say the more pressing problem was reconciling the funds that we thought had come in from customers, the ones that were reported on the FTX ledger, and whether those bank transfers had actually arrived.
MR. COHEN: And this took some work, correct?
MR. COHEN: Reconciling between Alameda and FTX fiat balances when this project started was a bit of a mess, correct?
CAROLINE ELLISON: Yes, that's right.
MR. COHEN: Now, FTX eventually got its own bank accounts, correct?
CAROLINE ELLISON: Yes, it did.
MR. COHEN: That was at the end of 2021 into 2022?
CAROLINE ELLISON: I don't know the exact time frame, but that sounds plausible.
MR. COHEN: Once that happened, customers could deposit their fiat directly to FTX, is that correct?
CAROLINE ELLISON: That's right.
MR. COHEN: Was there an issue with customers who had been customers before the changeover?
CAROLINE ELLISON: Yes, there was. Some of them didn't want to change to using new bank account instructions.
MR. COHEN: But they were sort of legacy customers?
CAROLINE ELLISON: Yeah, that's right.
MR. COHEN: And they would continue to wire the funds to the old Alameda accounts.
CAROLINE ELLISON: To the North Dimension accounts.
MR. COHEN: Do you recall ever reviewing that topic with Sam?
CAROLINE ELLISON: Yes, I do.
MR. COHEN: What do you recall?
CAROLINE ELLISON: I recall finding out from the settlement team that there were still many of these legacy customers depositing funds into North Dimension accounts, and I brought up -- I brought this issue up with Sam and said, we should probably stop people depositing into North Dimension and switch them all over to FTX, right. And he said, yeah, that sounds good.
MR. COHEN: What was his demeanor?
CAROLINE ELLISON: I think this was over Signal. I don't recall, really notice a demeanor.
MR. COHEN: From your perception, was he aware that this was still going on?
CAROLINE ELLISON: I don't remember getting an impression of whether he was aware or not of this.
MR. COHEN: Can we call up 3550-31, please. I'm sorry. Wrong document. I apologize. 3550-03.
JUDGE KAPLAN: Mr. Cohen, tab?
MR. COHEN: I'm sorry, your Honor. It is tab 3.
JUDGE KAPLAN: Thank you.
MR. COHEN: Page 7, your Honor. It's the first paragraph at the top.
MR. COHEN: Just read it to yourself. The question is whether this refreshes your recollection as to whether you told the prosecutors about this issue.
MS. SASSOON: Objection. That wasn't the question prior.
JUDGE KAPLAN: Agreed.
Rephrase.
MR. COHEN: Let me back up.
MR. COHEN: Do you recall speaking with the prosecutors on December 8?
CAROLINE ELLISON: I recall generally speaking with the prosecutors.
MR. COHEN: And is it fair to say that you were asked about Mr. Bankman-Fried's reaction when you informed him that funds were still being sent to the Alameda accounts?
CAROLINE ELLISON: Yeah, I remember being asked about that.
MR. COHEN: You recall what you told the prosecutors.
MS. SASSOON: We can take the document off.
MR. COHEN: Yes. Take the document down.
CAROLINE ELLISON: I don't recall exactly what I told the prosecutors.
MR. COHEN: Now can I bring the document up?
JUDGE KAPLAN: Yes.
MR. COHEN: Read that paragraph to yourself. The question is, yes, no, whether it refreshes your recollection.
CAROLINE ELLISON: Yeah, it does refresh my recollection.
MR. COHEN: What is your recollection, Ms. Ellison?
CAROLINE ELLISON: Yeah.
MS. SASSOON: Can we take the document down, your Honor?
JUDGE KAPLAN: Yes. A. Yeah. I recall -- I think I recall saying that it seemed like he might not know that this was happening, something like that.
MR. COHEN: I want to move forward --
MS. SASSOON: Your Honor, just because of the vagueness of the question.
MR. COHEN: Can we have nonspeaking objections please, your Honor.
MS. SASSOON: This objection --
JUDGE KAPLAN: Is everybody prepared to take the pledge on that on both sides?
MR. COHEN: I am, and I did.
MS. SASSOON: This is a difficult one to not explain.
JUDGE KAPLAN: Sidebar.
MS. SASSOON: This doesn't warrant a sidebar, your Honor. I don't want to waste time.
JUDGE KAPLAN: The objection is withdrawn.
MS. SASSOON: Yes.
MR. COHEN: Let's move to a new topic, Ms. Ellison.
I am going to move forward to the summer of 2021. Do you recall yesterday giving testimony about interactions you had with Sam about whether he ought to make a new venture investment?
CAROLINE ELLISON: Yes, I do.
MR. COHEN: Can we please call up Government Exhibit 48B in evidence.
MR. COHEN: Do you recall seeing this document yesterday, Ms. Ellison?
CAROLINE ELLISON: Yes, I do.
MR. COHEN: Just to orient us and the jury, can you describe what this was.
CAROLINE ELLISON: This document generally was a document of personal notes and to-do lists that I kept.
MR. COHEN: This was in connection with the issue of whether to make the additional venture investment?
CAROLINE ELLISON: I don't think I recall whether these notes were in connection with that.
MR. COHEN: Do you recall that Sam asked you to do an analysis in connection with the venture investment?
CAROLINE ELLISON: Yeah.
MR. COHEN: Was this analysis at all referenced in 48B?
CAROLINE ELLISON: I don't remember if this is the same -- part of the same conversation about the investments or if this was a separate conversation about a similar scenario.
MR. COHEN: We used yesterday the phrase, the 10th percentile scenario. Maybe I misheard. Was that in connection with the venture investment?
CAROLINE ELLISON: I don't recall if these notes were in connection with the conversation specifically about venture investments, but there were similar notes in the other document we looked at that I do recall being in connection with a conversation about venture investments.
MR. COHEN: I don't have many more questions on this, but was this something, notes you made, after interactions with Sam?
CAROLINE ELLISON: Yeah. I believe this was a message that Sam sent that I copied and pasted into this document.
MR. COHEN: It set forth assumptions you should make for your analysis.
CAROLINE ELLISON: Yes, that's right.
MR. COHEN: Item 1: Most of crypto down 50 percent, correct?
CAROLINE ELLISON: Yeah.
MR. COHEN: In your time as a trader and CEO of Alameda, had crypto gone down 50 percent?
CAROLINE ELLISON: Yeah, it did.
MR. COHEN: When was the last time it had done that?
CAROLINE ELLISON: I think the last time was in 2022.
MR. COHEN: Other than 2022. Fair point.
CAROLINE ELLISON: Before that, maybe March of 2020.
MR. COHEN: Item 4 says: Stocks down 25 percent, and I think you testified that referred to the general stock market?
CAROLINE ELLISON: Yeah, that's right.
MR. COHEN: And growth tech stocks down 50 percent. What do you mean by growth tech?
CAROLINE ELLISON: I think Sam was the one who wrote this.
MR. COHEN: What was your understanding?
CAROLINE ELLISON: My understanding was, this was more volatile technology stocks.
MR. COHEN: So the assumption here was that they would go down by 50 percent.
CAROLINE ELLISON: Yes, that's right.
MR. COHEN: And on item 2, and that's my last question on this, the assumption was that the venture investment would go all the way down 100 percent?
MR. COHEN: You can take that exhibit down.
MR. COHEN: Mr. Bankman-Fried asked you to do various risk-analysis scenarios with respect to the venture investment, correct?
CAROLINE ELLISON: That's right.
MR. COHEN: Did you think it was an appropriate thing for him to ask you to do that?
CAROLINE ELLISON: Yeah.
MR. COHEN: Why?
CAROLINE ELLISON: Because I was a trader at the time, so talking to me about trading issues seemed appropriate.
MR. COHEN: Let's take a look at Government Exhibit 36 in evidence.
If we can call out the middle page, main question.
Brian, it's column F. F and G together.
MR. COHEN: Ms. Ellison, can you just remind us again what you were doing in that spreadsheet.
Let me back up. This was a spreadsheet that you created?
CAROLINE ELLISON: Yes, that's right.
MR. COHEN: This was part of the analysis you were doing of the risk of making a venture investment?
MR. COHEN: What did that refer to, those questions?
CAROLINE ELLISON: Those questions were questions that I had for Sam that I was trying to analyze about ways to potentially reduce the risk of these venture investments.
MR. COHEN: So there are different things that you could do to reduce the risk?
CAROLINE ELLISON: That's right.
MR. COHEN: Raise more equity, sell more FTT, and so on, correct?
CAROLINE ELLISON: That's right.
MR. COHEN: Brian, if we could look at column A, line 2, just line 2, and go all the way across.
MR. COHEN: You see an entry, raised at 18B with FTT 24 dash and greater than sign. Now it's 52.
Can we have a translation, Ms. Ellison.
CAROLINE ELLISON: Yes. That means that FTX raised equity at a valuation of $18 billion when FTT was at a price of $24, and then at the time I was making the spreadsheet FTT had gone up to a price of $52.
MR. COHEN: What does it mean to raise equity at a price of $18 billion?
CAROLINE ELLISON: That means that FTX had sold stock in the company at a price that meant that the sort of price of the entire company's stock would be $18 billion.
MR. COHEN: So in valuing the offering to investors, the company was valued at $18 billion?
CAROLINE ELLISON: That's right.
MR. COHEN: We can take that one down.
Can we call up DX-48 only for identification for the witness.
Your Honor, it's tab 37 in your binder.
JUDGE KAPLAN: Thank you.
MR. COHEN: Ms. Ellison, do you recognize this document?
CAROLINE ELLISON: Yes. This is a spreadsheet that I made.
MR. COHEN: What was your purpose in making it?
CAROLINE ELLISON: This was as part of discussions with Sam about whether we should hedge more, that is, sell either Bitcoin or NASDAQ futures in order to reduce Alameda's risk.
MR. COHEN: And was this the sort of spreadsheet you would prepare in the course of your duties at Alameda?
CAROLINE ELLISON: Yeah.
MR. COHEN: Was it your regular practice to do so?
CAROLINE ELLISON: No, I wouldn't say it was a regular practice. This was sort of a special circumstance of a time period when we were discussing hedging a lot.
MR. COHEN: So this was only something you did once?
CAROLINE ELLISON: I think I made a few spreadsheets around this time to analyze the question of how much we should hedge.
MR. COHEN: How many did you make?
CAROLINE ELLISON: Two or three that I can recall.
MR. COHEN: Let's take it down so the witness can't see it.
You may bring it back up in a moment.
MR. COHEN: Do you recall ever doing an analysis of the costs of not hedging?
CAROLINE ELLISON: Yeah.
MR. COHEN: Can you tell us what that analysis was.
CAROLINE ELLISON: I recall doing such analyses. One example is the spreadsheet that we were just looking at earlier from 2021, where one of the questions is whether -- what the various ways to reduce risk are.
MR. COHEN: Do you recall ever trying to do a calculation -- one second.
We are going to stay in 2021, but just for this question let me move to September 2022, Ms. Ellison.
Do you ever recall trying to do a calculation of what the costs would be of not hedging in Alameda?
CAROLINE ELLISON: Yes, I do.
MR. COHEN: What do you remember about that?
CAROLINE ELLISON: I remember that my calculation ended up suggesting that we should sell several billion dollars to hedge, but it was fairly sensitive to various parameters and there were a lot of things I was uncertain about.
MR. COHEN: In connection with that analysis, did you ever look at what the probability per month would be of Alameda suffering losses depending on what happened to its NAV?
CAROLINE ELLISON: Yes, I think I did.
MR. COHEN: What do you remember about that?
CAROLINE ELLISON: I think I recall looking at historical crypto volatility to determine the probability of some sort of specific down move per month and then comparing that to Alameda's overall crypto position in various scenarios, whether we hedged or not.
MR. COHEN: Did you consider what might happen in that scenario to the NAV if Alameda lost $5 billion?
CAROLINE ELLISON: I don't remember if that was one of the specific scenarios.
MR. COHEN: Did you consider what would happen if Alameda lost $10 billion?
CAROLINE ELLISON: I don't remember.
MR. COHEN: Let's move to 2022, Ms. Ellison.
JUDGE KAPLAN: I thought we were just in September 2022.
MR. COHEN: We were back and forth, but here we are.
MR. COHEN: I think you told us yesterday that in about May something called UST fell below a dollar.
Do you recall that?
CAROLINE ELLISON: I don't recall mentioning that.
MR. COHEN: Do you recall giving testimony about Terra and Luna yesterday?
CAROLINE ELLISON: Yes. I recall mentioning that the coin Luna went down a lot in May of 2022.
MR. COHEN: Did you ever hear of the term -- of the token UST?
MR. COHEN: What was that?
CAROLINE ELLISON: It was an algorithmic stablecoin that was related to Luna.
MR. COHEN: When Luna went down, did it also fall?
CAROLINE ELLISON: Yes, it did.
MR. COHEN: Did Alameda own UST?
CAROLINE ELLISON: Yes, we did.
MR. COHEN: And it owned it before it went down in price, correct?
CAROLINE ELLISON: That's right.
MR. COHEN: Did Alameda end up taking a loss on the UST?
CAROLINE ELLISON: Yes, we did.
MR. COHEN: How much?
CAROLINE ELLISON: I think it was ballpark of $100 million.
MR. COHEN: What was your understanding of why Alameda took that loss?
CAROLINE ELLISON: I'm sorry. I don't know what you mean.
MR. COHEN: Well, as the CEO of Alameda, did you have occasion to review what had happened in connection with the UST investment?
CAROLINE ELLISON: Yes, I did.
MR. COHEN: What did you conclude?
CAROLINE ELLISON: I concluded that it had been a bad idea, a mistake at the time to own UST.
MR. COHEN: Did you look at whether or not Alameda should have sold it at any point in time?
CAROLINE ELLISON: Yes. After the fact I came to believe that Alameda should have sold it. Maybe that's an easy thing to say in retrospect.
MR. COHEN: It's always easier in hindsight.
MS. SASSOON: Your Honor, we move to strike that.
JUDGE KAPLAN: Strike Mr. Cohen's remark, however true it may be.
MR. COHEN: At least something I said.
I lost my place. Hold on.
Can we call up Government Exhibit 25B in evidence.
MR. COHEN: I think you testified yesterday that 25B were some of your notes that you made about Alameda, correct?
CAROLINE ELLISON: Yes, that's right.
MR. COHEN: And the first page we are looking at listed work priorities.
CAROLINE ELLISON: Um-hum.
MR. COHEN: Do you recall approximately when these notes were from?
CAROLINE ELLISON: Yeah. Sorry. Could you zoom out?
Yeah. I think this is from the fall of 2022.
MR. COHEN: Could it have been August of 2022?
CAROLINE ELLISON: Yeah, it might have been August.
MR. COHEN: At the top you listed work priorities, correct?
CAROLINE ELLISON: That's right.
MR. COHEN: What did that refer to?
CAROLINE ELLISON: That referred to things I thought were important in my job.
MR. COHEN: The first item you listed was hedging getting more capital.
Do you see that?
MR. COHEN: What did that refer to?
CAROLINE ELLISON: So hedging referred to ways to reduce Alameda's risk by selling assets that were correlated with Alameda's portfolio, and getting more capital referred to ways to raise more money, whether it was by getting loans or selling equity for FTX.
MR. COHEN: And this is from, we will call it, August, September of 2022, correct?
CAROLINE ELLISON: Yes, I believe so.
MR. COHEN: Prior to that time, in the period of 2022 and before that, had Alameda hedged against the crypto market?
CAROLINE ELLISON: We had hedged some.
MR. COHEN: Do you recall having a discussion with Sam about your hedging prior to August, September?
CAROLINE ELLISON: Yeah. I recall having various discussions with him about hedging over time.
MR. COHEN: And what was the discussion?
MS. SASSOON: Objection, form. She said various discussions over time.
JUDGE KAPLAN: Sustained as to form.
MR. COHEN: Let me break it down.
MR. COHEN: I want to focus on discussions on hedging in the period from, let's call it, January 2022 to the date of this document.
CAROLINE ELLISON: Yes. Sorry. What about them?
MR. COHEN: You said you had a number of conversations with him about hedging. Were any in that time period?
MR. COHEN: How many?
CAROLINE ELLISON: I don't remember.
MR. COHEN: What was the gist of those conversations?
CAROLINE ELLISON: Earlier in the year we had some conversations about whether Alameda should hedge our positions more. Sam suggested that we might want to sell stocks or more specifically NASDAQ futures to hedge our long exposure, and I was more skeptical of that idea, and we didn't end up doing anything. Then later in the year we had more conversations and started to sell more NASDAQ futures.
MR. COHEN: Just for everyone's benefit, what is a long exposure?
CAROLINE ELLISON: That means that we owned a lot of cryptocurrency. So if the crypto market went down, we would lose a lot of money.
MR. COHEN: One way to try to offset that might be to buy hedges.
CAROLINE ELLISON: Yeah. I guess to put on hedges. In this case we were selling instruments.
MR. COHEN: Do you recall ever speaking with Sam and Gary together about hedging in that period? By speaking, I mean in a chat.
JUDGE KAPLAN: Which period are we talking about?
MR. COHEN: From January to August 2022.
CAROLINE ELLISON: Nothing comes to mind.
MR. COHEN: Now, is it fair to say that, starting in September, you did put on some hedges with respect to the crypto market moving down?
CAROLINE ELLISON: In September, we put on several billion dollars of hedges in NASDAQ futures.
MR. COHEN: Did you also put on hedges in Bitcoin?
CAROLINE ELLISON: Yes, we did sell some amount of Bitcoin and I think Ethereum, those smaller amounts.
MR. COHEN: Let me move to a new topic, Ms. Ellison.
I believe you testified, I think it was yesterday, about the period in June of 2022. I think you said it was June 13 when you learned about a bug relating to the fiat@ account.
Do you recall that?
CAROLINE ELLISON: I don't think I said it was on June 13 that I learned about this bug. My recollection is that I learned about it earlier, maybe in May, but June 13 I was aware of the bug.
MR. COHEN: Fair enough. OK.
MR. COHEN: Can we call up GX-64, please.
MR. COHEN: Just to remind everyone, what is GX-64, Ms. Ellison?
CAROLINE ELLISON: This was one of the update documents that I would write about Alameda and send to Sam.
MR. COHEN: Can we go, Brian, to the bottom of the page, the last paragraph. Can we call that out, pull that up.
MR. COHEN: It says: A lot of expensive trading bugs.
Do you see that, Ms. Ellison?
CAROLINE ELLISON: Yes, I do.
MR. COHEN: Then there is I think about -- you don't have to highlight them, Brian, but my count, eight different examples.
Do you see that?
CAROLINE ELLISON: Yes. I agree.
MR. COHEN: What does that relate to?
CAROLINE ELLISON: Those were various bugs that caused Alameda to lose money around the end of 2021.
MR. COHEN: So these were different bugs in the system?
CAROLINE ELLISON: Yes, that's right.
MR. COHEN: And going to the next page, I meant to show it to you, I apologize, so we can be complete.
MR. COHEN: Go to the very top, Brian, the first two bullet points.
MR. COHEN: The first entry says: Commonalities in trading bugs.
Do you see that?
MR. COHEN: What did that refer to?
CAROLINE ELLISON: Those referred to what I saw was common factors in how these bugs were able to happen.
MR. COHEN: So there had been at least eight bugs and it related to not having enough trading coverage, for example?
CAROLINE ELLISON: Yeah. The common factors that I saw were not having enough traders on and having recently hired a lot of new people who were making mistakes as they were still learning our systems.
MR. COHEN: Going to the next bullet point, fixes, were these your ideas on how to try to keep these bugs from happening?
CAROLINE ELLISON: Yeah. These were ideas that I and others had.
MR. COHEN: While we are on this document, we might as well not to put it back up again.
Can you go, Brian, to the second-to-last page.
Brian, call out the paragraph called limiting factors in scaling.
MR. COHEN: Take a moment and look at that for a minute, Ms. Ellison. That way, we won't have to come back to it.
CAROLINE ELLISON: Um-hum.
MR. COHEN: What did you mean by the phrase limited factors in scaling?
CAROLINE ELLISON: By limiting factors in scaling, I meant those were things that were preventing Alameda from doing as well and making as much money as we could.
MR. COHEN: The first one you put down was called management and vision.
You see that?
MR. COHEN: What do those entries refer to?
CAROLINE ELLISON: In that I was saying I thought the biggest factor was that Trabucco and I weren't as good managers or leaders as we could be, and we weren't pushing other -- pushing employees to make new things or do better in the way that I wished we were.
MR. COHEN: Then the next item was about the pros and cons of being in different locations, is that correct?
CAROLINE ELLISON: Yes, that's right.
MR. COHEN: The last item was your thoughts on the trading team.
CAROLINE ELLISON: Yes, that's right.
MR. COHEN: We can take that down.
MR. COHEN: Now, coming back to the bug we have been discussing from June 2022, how did you first learn about it?
CAROLINE ELLISON: I learned about it in a meeting with Sam, Gary, and Nishad. This was an in-person meeting in the Alameda Bahamas office. We came into this meeting to discuss Alameda's capital situation because at the time I believed Alameda's NAV to be negative or at least close to negative, that we were insolvent, and I wanted to discuss what to do about the situation, whether we would need to declare bankruptcy. But Gary came into this meeting and said, oh, by the way, there is a bug in Alameda's fiat liability, so your NAV numbers are actually off by several billion dollars.
MR. COHEN: When did you first become concerned that Alameda might be insolvent?
CAROLINE ELLISON: I think this was in around May of 2022, when the crypto market was going down.
MR. COHEN: Is this what led to meeting with Gary, Sam, and Nishad?
CAROLINE ELLISON: Yes, that's right.
MR. COHEN: Now, during this period in June, did you have other meetings with just Gary and Nishad?
MS. SASSOON: Your Honor, objection to this period in June.
MR. COHEN: We will just say June.
CAROLINE ELLISON: None that come to mind.
MR. COHEN: Did you have any Signal or other Slack communications with Gary and Nishad about the bug?
CAROLINE ELLISON: Yeah. I think we had some Signal communications in the chat that we shared with Sam.
MR. COHEN: I'm asking now, ma'am, a different question, whether you had Signal or Slack communications with Gary and Nishad that Sam was not on.
CAROLINE ELLISON: Not that I recall.
MR. COHEN: You don't recall that.
MR. COHEN: Now, you just told us that Gary took a look at this and concluded that there had been a bug in the system, correct?
MS. SASSOON: Objection, form.
JUDGE KAPLAN: Sustained.
MR. COHEN: Go over what Gary told you.
CAROLINE ELLISON: He said that he had found a bug in the calculation of Alameda's fiat liabilities. That meant that our current numbers were off by several billion dollars.
MR. COHEN: And when the account was adjusted for the impact of the bug, did that have an impact on whether or not Alameda was solvent, in your view?
CAROLINE ELLISON: It made our NAV significantly positive.
MR. COHEN: The NAV was significantly positive; it wasn't solvent?
CAROLINE ELLISON: I think that depends on market conditions and whether we could realistically sell our assets.
MR. COHEN: What was your reaction when Gary told you this?
CAROLINE ELLISON: At first, I was a bit skeptical and confused about how such a large bug could have happened and no one had noticed or caught it before now. But once I became convinced that it was real, I was quite relieved.
MR. COHEN: So you had not known about the bug previous to this sequence you just told us about?
CAROLINE ELLISON: That's right.
MR. COHEN: I think you told us one of your concerns -- withdrawn. Let me start again.
After the bug was discovered, what happened in terms of going forward?
CAROLINE ELLISON: There was a period of time where we were aware of the bug, but it hadn't been fixed yet, so I tried to adjust for it in my balance sheet calculations, and then eventually the bug was fixed.
MR. COHEN: What about the accounting in relation to the bug, what happened to that?
CAROLINE ELLISON: Can you specify what you mean by that?
MR. COHEN: Sure. After the bug was discovered, there had to be another reconciliation of the fiat@ account, correct?
CAROLINE ELLISON: Yes, that's right.
MR. COHEN: To your knowledge, did that happen?
CAROLINE ELLISON: Yes, it did.
MR. COHEN: Do you know when that happened?
MR. COHEN: Moving to a period after the bug, did you ever come to a view about whether the accounting for the fiat bug was in a better situation than it had been before?
CAROLINE ELLISON: Yes. After the bug had been fixed, I believe that our accounting was in a better situation.
MR. COHEN: Your Honor, I am about to start another topic. This might be a good time for our lunch break.
JUDGE KAPLAN: OK. We will come back at 20 minutes to 2, please.
(Luncheon recess)
AFTERNOON SESSION 1:44 p.m.
(In open court; jury present)
JUDGE KAPLAN: Okay. The defendant and the jurors all are present, as they have been throughout.
COURT CLERK: Please be seated.
JUDGE KAPLAN: You may continue, Mr. Cohen.
MR. COHEN: Thank you, your Honor. CROSS-EXAMINATION CONTINUED
BY MR. COHEN:
MR. COHEN: Good afternoon.
CAROLINE ELLISON: Good afternoon.
MR. COHEN: I want to move to another topic, Ms. Ellison.
Yesterday you testified about a period, I believe you said it was beginning in June, when you became concerned that lenders might recall their loans. Do you recall that?
CAROLINE ELLISON: Yes, that's right.
MR. COHEN: And I believe you testified that one of the things you started to do was to create balance sheets in which you made calculations as to Alameda's assets. Do you recall that?
CAROLINE ELLISON: I mean, it was part of my practice to create balance sheets before that, but I created more than usual in June.
MR. COHEN: And one of your concerns as you were doing this was, according to your calculations, Alameda did not have enough liquid assets to repay all its lenders, correct?
CAROLINE ELLISON: Yes, that's right.
MR. COHEN: Okay. And in that analysis did you take into account Alameda's illiquid assets?
CAROLINE ELLISON: I——I put those on the balance sheet as well.
MR. COHEN: And did you take a view about how long it would take to sell those assets?
CAROLINE ELLISON: Yeah, I had the view that it would take certainly longer to sell the assets than, you know, the few days in which we had to repay loans once they were recalled.
MR. COHEN: Okay. Now I think——well, let me ask it this way. When did——to your memory, ma'am, when did the lenders first recall the loans?
CAROLINE ELLISON: The first ones that I recall were around the beginning or middle of June.
MR. COHEN: And is it fair to say that those recalls continued through July and August?
CAROLINE ELLISON: Yes, I believe there continued to be some in July and August.
MR. COHEN: Okay. In your memory what was the whole period of the recalls?
CAROLINE ELLISON: I——well, there were further recalls in November as well.
MR. COHEN: Okay. We'll get to those, but prior to November.
CAROLINE ELLISON: I don't remember when the last recall was prior to November.
MR. COHEN: Okay. And I believe you testified that ultimately——well, rephrase.
You testified that the loans were repaid by drawing on the Alameda line of credit, correct?
CAROLINE ELLISON: Yes, I did.
MR. COHEN: Okay. Now is it fair to say that when Alameda drew on its line of credit, the amount of the borrowing on the line of credit would go up?
CAROLINE ELLISON: Yes, that's right.
MR. COHEN: Okay. How many——how much was repaid in the loans during this June, July, August period?
CAROLINE ELLISON: I think it was in the range of 5 to $10 billion.
MR. COHEN: And that would be reflected in a 5 to $10 billion increase in the line of credit?
CAROLINE ELLISON: No. I think I testified that drawing on the line of credit was one of the ways in which Alameda repaid its lenders, but we also used other liquid assets as well.
MR. COHEN: And do you recall the amount of the loans that were recalled just in the June period?
CAROLINE ELLISON: I think maybe ballpark of $5 billion.
MR. COHEN: In June. It wasn't less than that.
CAROLINE ELLISON: I'm not sure if it was less than that.
MR. COHEN: Okay. Now one thing that was happening, if I understand this correctly, was the value of cryptocurrencies was going down, correct?
CAROLINE ELLISON: Yes, that's right.
MR. COHEN: And a lot of the loans were in cryptocurrencies, correct?
CAROLINE ELLISON: Yes, that's right.
MR. COHEN: Did that have an impact on the value of the loans?
CAROLINE ELLISON: Yes, it caused the value of the loans to go down somewhat, though a lot of the loans were in US dollars as well.
MR. COHEN: So, but if Alameda had a loan in cryptocurrency and the value of that cryptocurrency went down, then the value of the loan would go down.
CAROLINE ELLISON: That's correct.
MR. COHEN: Okay. Now in your experience as the CEO of Alameda, have you ever heard of the term rolling over a loan?
CAROLINE ELLISON: Yeah. That referred to, when the term of a loan ended, taking out a new loan with similar terms.
MR. COHEN: Were some of the loans you've just been talking about in fact rolled over?
CAROLINE ELLISON: I don't specifically remember rolling over any loans during this time period. I do remember there were I think a few loans for small size, like new loans, that we did get in the summer and fall of 2022.
MR. COHEN: So you don't remember one way or the other whether any of the existing loans were rolled over.
CAROLINE ELLISON: That's right.
MR. COHEN: Okay. And the loans that we're talking about from the June, July period, those were repaid, correct?
CAROLINE ELLISON: Yes, that's right.
MR. COHEN: Okay. In your experience in Alameda as the CEO, did you ever——withdrawn.
Did you ever have occasion to renegotiate a loan?
CAROLINE ELLISON: Yes, we did sometimes.
MR. COHEN: What does that mean?
CAROLINE ELLISON: That means to ask for different terms on the loan.
MR. COHEN: For example, putting out the date that the loan might be due?
CAROLINE ELLISON: Yeah, or asking for a different interest rate or something like that.
MR. COHEN: Okay. Fair enough.
Now you didn't do that with respect to the loans in June that we've been talking about, June and July.
CAROLINE ELLISON: I don't recall doing that, no.
MR. COHEN: Now you gave testimony yesterday about an exchange you'd had with Matt Ballensweig of Genesis. Do you recall that?
MR. COHEN: Okay. If we could pull up Government Exhibit 1649, please.
MR. COHEN: And that's the chain where you were having a discussion with Mr. Ballensweig about recalling——about Genesis recalling the loan.
CAROLINE ELLISON: This looks like our discussion about us sending a balance sheet to Genesis.
MR. COHEN: Fair enough. I was thinking of the one before that.
So this is on June 18th; is that correct?
CAROLINE ELLISON: That's right.
MR. COHEN: Okay. And Mr. Ballensweig is asking you for a balance sheet, correct?
CAROLINE ELLISON: Yes, he is.
MR. COHEN: Okay. If we could go to the second page, Brian.
MR. COHEN: Okay. If you look at the last entry, Mr. Ballensweig says, "basic works—–really trying to get a sense of overall equity and liquid capital (non locked)." What did you understand that to refer to?
CAROLINE ELLISON: Overall equity refers to the net asset value of Alameda; liquid capital refers to their liquid assets, things that could be sold easily; and by basic works, I understood him to mean that he didn't need me to put anything together that was formal or took a lot of effort and he would prefer to get it faster.
MR. COHEN: Faster, more informal.
CAROLINE ELLISON: Yes, that's right.
MR. COHEN: About overall equity and liquid capital.
CAROLINE ELLISON: Yeah.
MR. COHEN: Okay. Now can we pull up Government Exhibit 44, please.
MR. COHEN: Okay. Now I promise you we're not going to go through this whole thing again, but I just want to understand something.
You testified yesterday that this was a spreadsheet that you shared with Mr. Bankman-Fried; is that correct?
CAROLINE ELLISON: Yes, I did.
MR. COHEN: Okay. And again, what was your reason for sharing it with him?
CAROLINE ELLISON: He suggested that I should put together some alternative presentations of our balance sheet and run them by him.
MR. COHEN: And as I understand it, these are seven different versions of the balance sheet?
CAROLINE ELLISON: Yes, or maybe eight, including the main tab.
MR. COHEN: Right. Because main would be its own, right?
CAROLINE ELLISON: Mm-hmm.
MR. COHEN: Okay. Which was the one you ended up sending to Mr. Ballensweig?
CAROLINE ELLISON: Alt 7.
MR. COHEN: Now did you discuss——
JUDGE KAPLAN: Just so the record is clear, I want to make sure the reporter got Alt, A-L-T, as opposed to all, A-L-L.
MR. COHEN: Thank you, your Honor.
JUDGE KAPLAN: Thanks.
MR. COHEN: Did you discuss each of these balance sheets with Mr. Bankman-Fried?
CAROLINE ELLISON: I don't remember if I discussed all of them with him. I know we discussed at least some.
MR. COHEN: You don't remember whether you discussed the pros and cons of each of them with him.
CAROLINE ELLISON: I don't remember if we discussed the pros and cons of each one, just that we discussed the pros and cons of some.
MR. COHEN: Now you told us yesterday that one of the distinguishing factors was that some versions had a category called Exchange Borrows.
MR. COHEN: If we could call up——are we on Alt 7? Excuse me. Not on Alt 7, Alt——I believe it's Alt 1.
Right.
MR. COHEN: Okay. And I believe you told us that referred to borrows that Alameda had made from the FTX exchange.
CAROLINE ELLISON: That's right.
MR. COHEN: Okay. This was——by the way, this was a balance sheet that you——series of balance sheets that you sent to Mr. Bankman-Fried.
CAROLINE ELLISON: That's right.
MR. COHEN: Just the two of you had access to them?
MR. COHEN: Just the two of you spoke about them.
CAROLINE ELLISON: Yes, that's right.
MR. COHEN: But you told us you felt the need to put them into a code by using the phrase "Exchange Borrows"; is that correct?
CAROLINE ELLISON: Yeah. I mean, I wouldn't consider "Exchange Borrows" that much of a code, but it's a little more——a little less direct than saying "FTX Borrows."
MR. COHEN: But not really——
MS. SASSOON: I would ask that the witness be allowed to finish her answer.
JUDGE KAPLAN: Had you finished?
CAROLINE ELLISON: Yes, I think I've finished now.
MR. COHEN: And on Alt 1, the other provision that you spent some time about was under——row 14, Brian——related-party loans.
CAROLINE ELLISON: Mm-hmm.
MR. COHEN: And that, I believe——you'll tell me if I'm wrong——related to the loans that had been made to Mr. Bankman-Fried and Gary and so forth, correct?
CAROLINE ELLISON: That's right.
MR. COHEN: These were loans made by Alameda to the founders and other individuals.
CAROLINE ELLISON: And other entities, yes.
MR. COHEN: Okay. Now your concern about Alt 7 and some of the other balance sheets was that it didn't include exchange borrows and related-party loans.
CAROLINE ELLISON: Yes, that's right.
MR. COHEN: Okay. Because in fact, the NAV was the same on all of them.
CAROLINE ELLISON: That's right.
MR. COHEN: So the overall equity shown was the same.
CAROLINE ELLISON: Yes, that's right.
MR. COHEN: And I believe you told us one of your concerns about the exchange borrows was that these reflected loans from the FTX exchange that might themselves be in illiquid assets; is that correct?
CAROLINE ELLISON: No, I don't recall that.
MR. COHEN: Let me rephrase. I'm sorry. I didn't mean to cut you off. Finish your answer.
CAROLINE ELLISON: Sorry. I just said, "No, I don't recall that." Yeah, rephrasing would be helpful.
MR. COHEN: Then let me rephrase.
What were your concerns about the exchange borrows category?
CAROLINE ELLISON: My concerns were (1) that it reflected that Alameda had a high level of risk because these were funds that FTX customers could withdraw at any time and Alameda would need to repay the assets to FTX; and (2) that it reflected poorly on FTX and would make FTX customers concerned about the safety of putting their funds on FTX.
MR. COHEN: And was part of the level of risk you were considering that the assets——some of them, anyway——had been put in illiquid investments?
CAROLINE ELLISON: Yes, that's right, that the assets Alameda had borrowed had been invested in illiquid investments.
MR. COHEN: And would it have been a factor in your analysis if some of those had instead been put into things like Bitcoin?
CAROLINE ELLISON: Yeah.
MR. COHEN: Now just to complete that, Bitcoin being a more liquid cryptocurrency?
MS. SASSOON: Objection, 401, 403.
JUDGE KAPLAN: Overruled.
MR. COHEN: I'll move on, your Honor.
MR. COHEN: Now the concern you had——let me just do it this way.
What was your concern about the related-party loans?
CAROLINE ELLISON: My concerns were that they had been invested in illiquid assets, meaning that they weren't loans that Alameda could get back easily, and that it——the fact that the number was so large might make it look to lenders as if Alameda was giving or funneling money to FTX executives.
MR. COHEN: And again, one factor that you would have considered would be if they were not in illiquid investments, correct?
CAROLINE ELLISON: Yes, that's right.
MR. COHEN: Okay. And so your concern was not about the total NAV, correct?
CAROLINE ELLISON: That's right.
MR. COHEN: All right. We can take that one down.
MR. COHEN: After the June and July loans were paid back, we came into August. I believe you told us earlier today that you would do midyear reviews of Alameda; is that correct?
CAROLINE ELLISON: Yes, we had a twice-a-year review process.
MR. COHEN: And did you do one in August of 2022? Excuse me. July, August?
CAROLINE ELLISON: What do you mean exactly by did I do one?
MR. COHEN: Let me rephrase.
Do you recall preparing an Alameda 2022 overview in July of 2022?
CAROLINE ELLISON: I recall writing a Google Doc around that time to share with Alameda employees about what had been going on in Alameda, if that's what you're referring to.
MR. COHEN: Okay. I think it is.
Okay. Now what was your view as of that period as to how Alameda had done so far during the year?
CAROLINE ELLISON: 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.
MR. COHEN: Isn't it fair to say that you indicated in that document you thought Alameda had executed really well in 2022?
MS. SASSOON: Objection, form.
JUDGE KAPLAN: No, I'll allow the question.
CAROLINE ELLISON: Yeah, I recall giving a much more positive take in that document than my true opinion of how Alameda was doing. It was a——a document that was written for Alameda employees and so partly I wanted to help keep their morale up, partly I did think that Alameda employees had executed well over the past six months and that the problems in Alameda were coming from the management decision-making level.
MR. COHEN: Was your purpose to keep their morale up?
CAROLINE ELLISON: That was one of my purposes.
MR. COHEN: Were you also misleading them?
CAROLINE ELLISON: Yeah, I'd say I was misleading them about my true feelings about the state of Alameda in this document.
MR. COHEN: Can we call up GX 25, please.
MS. SASSOON: I just want to clarify because this is not in evidence.
JUDGE KAPLAN: What's to clarify?
MS. SASSOON: That it's being pulled up only for the witness.
JUDGE KAPLAN: Yes. Thank you.
MR. COHEN: I'm sorry. Can we instead pull up 25B, Government Exhibit.
Brian, can you——well, before we get to the pages. . .
BY MR. COHEN:
MR. COHEN: Again, this was one of the Google Docs you prepared about Alameda's business, correct?
CAROLINE ELLISON: Yes, this was a part of one of my personal to-do list documents.
MR. COHEN: Okay. And I believe you said this was prepared around August of 2022; is that correct?
CAROLINE ELLISON: Yes, I said August or fall.
MR. COHEN: Okay. Can we now go to the last page, please.
And right above the blackout portion, can you pull that up, Brian. Thank you.
MR. COHEN: You told us yesterday you made a list about things Sam is freaking out about. This was in August or fall of 2022. The first entry was hedging; is that correct?
CAROLINE ELLISON: That's right.
MR. COHEN: And does that relate to the conversation we had earlier before the break about hedging?
CAROLINE ELLISON: Yes, that's right.
MR. COHEN: Okay. There is also——if you look down five bullets, there's something called "Raising from MBS." Do you see that?
MR. COHEN: What did that refer to?
CAROLINE ELLISON: That referred to selling FTX equity to Mohammed bin Salman, a Saudi prince, to raise money.
MR. COHEN: Do you know if Mr. Bankman-Fried had been planning to go to the Middle East?
CAROLINE ELLISON: Yes, I did.
MR. COHEN: Okay. What did you know about that?
CAROLINE ELLISON: He told me that he went to the Middle East and tried to raise funds there, but it didn't sound like he had had success. He also told me that he wanted to——he had met some people from Telegram there and wanted to make a large investment in Telegram.
MR. COHEN: Let me back up. Did the topic of Mr. Bankman-Fried attending an investors conference in the Middle East ever come up?
CAROLINE ELLISON: I don't recall hearing specifically about an investors conference.
MR. COHEN: Okay. Now if you look at the two bullet points below that, there's something called Alameda/Modulo relationship. Do you see that?
CAROLINE ELLISON: Yeah, Alameda/Modulo relationship.
MR. COHEN: Modulo. Excuse me. What does that relate to, Ms. Ellison?
CAROLINE ELLISON: That relates to the hedge fund called Modulo that Alameda had invested in and Sam had said on a few occasions and written Google Docs that he thought we should——Alameda should do a better job of working together with Modulo.
MR. COHEN: Okay. And Modulo was a trading firm?
CAROLINE ELLISON: Yes, that's right.
MR. COHEN: It was similar in structure to Alameda?
CAROLINE ELLISON: I don't know if I would say it was that similar. It had a hedge fund structure as opposed to Alameda's proprietary trading firm structure. And it was much smaller; it only had about four people.
MR. COHEN: Did you view Modulo as a competitor to Alameda?
CAROLINE ELLISON: Yeah, I did, in some ways.
MR. COHEN: What ways?
CAROLINE ELLISON: I think there was some level of competition over hiring. I also thought there might be some amount of competition over trading. I didn't really know how much because I didn't know what types of trading strategies they were doing.
MR. COHEN: Was there also a concern that capital might be sent to Modulo instead of Alameda?
CAROLINE ELLISON: Yes, that's right. That's another way in which they were somewhat competitive.
MR. COHEN: Is it fair to say that you would prefer that Alameda receive capital over Modulo?
CAROLINE ELLISON: I mean, I thought that it made more sense to keep capital in Alameda than invested in Modulo.
MR. COHEN: Who were the people who ran Modulo?
CAROLINE ELLISON: Lily Zhang and Duncan Rheingans-Yoo.
MR. COHEN: And please answer this yes or no. Did you have any personal competition with them?
CAROLINE ELLISON: Yeah.
MR. COHEN: And as between them, you wanted to succeed if it meant at their expense, correct?
CAROLINE ELLISON: Sorry. Can you repeat the question.
MR. COHEN: If it came down to you succeeding——you meaning Alameda——at their expense, you wanted to succeed, correct?
CAROLINE ELLISON: I mean, I think it depends on how much it was to their expense. If it——if the question is would I rather have a dollar in Alameda or in Modulo, I would prefer it to be in Alameda.
MR. COHEN: Didn't part of you want to crush them?
CAROLINE ELLISON: Yeah. I remember having feelings like that at some point.
MR. COHEN: We can take that down.
MR. COHEN: Do you recall earlier today and yesterday we talked about venture investments? Do you recall that?
CAROLINE ELLISON: That's right.
MR. COHEN: And those were investments that Alameda had made in different kinds of ventures.
CAROLINE ELLISON: Yes, that's right.
MR. COHEN: Okay. Do you recall an investment in a company called Robinhood?
CAROLINE ELLISON: Yes, I do.
MR. COHEN: Okay. How did that investment work, if you remember?
CAROLINE ELLISON: Sam said that he thought Robinhood was a good value and that he wanted Alameda to buy it. We did buy many shares over a period of time and eventually, before having to disclose those purchases, transferred them to another entity in a different name.
MR. COHEN: Okay. So the shares were purchased by Alameda, correct?
CAROLINE ELLISON: Yes, that's right.
MR. COHEN: But they were placed in a different entity.
CAROLINE ELLISON: That's right.
MR. COHEN: Do you remember the name of that entity?
CAROLINE ELLISON: I think it was Emergent Fidelity Technologies.
MR. COHEN: Okay. And who controlled Emergent?
MR. COHEN: Okay. Did you have a view about whether or not Emergent would lend those shares to Alameda if it needed them?
CAROLINE ELLISON: Yes, I thought it would.
MR. COHEN: Okay. Did you have a view about whether Sam would lend or provide other assets he owned to Alameda if necessary?
MS. SASSOON: Objection.
JUDGE KAPLAN: Sustained.
MR. COHEN: All right. Let me move to——I might come back to that, but let me move to another topic now.
Let me call your attention to the first week of November 2022. Okay?
CAROLINE ELLISON: Mm-hmm.
MR. COHEN: Do you recall that on November 2nd, an article came out in CoinDesk?
MR. COHEN: Do you recall you were shown parts of that article yesterday?
CAROLINE ELLISON: Yes. Or actually——sorry——I don't recall being shown the CoinDesk article yesterday, but——
MR. COHEN: Okay. Your understanding, what was the article about, in general?
CAROLINE ELLISON: The article was about Alameda's balance sheet.
MR. COHEN: And somebody had leaked Alameda's balance sheet to CoinDesk?
CAROLINE ELLISON: That's right.
MR. COHEN: What was your response upon learning of that?
CAROLINE ELLISON: I was concerned that this would cause negative market sentiment about Alameda. I considered whether to give a comment for the article, but Sam, I, and others in a group chat decided not to.
MR. COHEN: Now around the time this article came out, did you forward certain balance sheets to Mr. Bankman-Fried?
CAROLINE ELLISON: Yeah, I think I did.
MR. COHEN: Okay. Can we pull up Government Exhibit 10, please.
MR. COHEN: Was this one of the balance sheets you forwarded to him around the time of the CoinDesk article?
MS. SASSOON: Objection to the time frame.
JUDGE KAPLAN: Sustained. Be more specific, please.
MR. COHEN: Do you remember, Ms. Ellison, when you forwarded this to Mr. Bankman-Fried?
CAROLINE ELLISON: I don't for certain. There are other——I know there are a few balance sheets around this time period that look similar.
MR. COHEN: Let's pull up Government Exhibit 11 and see if that helps you at all.
MR. COHEN: And looking at that, does that help you remember when you forwarded it to Mr. Bankman-Fried?
JUDGE KAPLAN: Sustained as to form. Does looking at this refresh her recollection as to when she forwarded exactly what to the defendant? This or the last one?
MR. COHEN: This one, GX 11.
JUDGE KAPLAN: Did you forward GX 11 to the defendant?
CAROLINE ELLISON: I remember sharing it with him at some point.
JUDGE KAPLAN: Okay. Now ask your question, please.
BY MR. COHEN:
MR. COHEN: To follow up on his Honor's question, does this refresh your recollection about when you forwarded it to him?
MS. SASSOON: Objection.
MS. SASSOON: The witness hasn't said anything that requires refreshing of her recollection.
MR. COHEN: Can we have nonspeaking objections, please.
MS. SASSOON: Form.
JUDGE KAPLAN: Sustained.
MR. COHEN: Now when the CoinDesk article first came out, do you remember what your reaction was, Ms. Ellison?
CAROLINE ELLISON: Yeah. As I think I've said, I was——
MS. SASSOON: Objection, your Honor. This was asked on direct, it's been asked on cross.
JUDGE KAPLAN: It was asked just a couple of minutes ago. Sustained. Asked and answered.
MR. COHEN: Okay.
MR. COHEN: Let's move forward to November 6th, okay?
CAROLINE ELLISON: Okay.
MR. COHEN: All right. Now I think you testified that you ended up putting up a tweet in response to the CoinDesk article, correct?
CAROLINE ELLISON: Yes, I did.
MR. COHEN: Can we look at GX 875.
MR. COHEN: And this is the tweet that you put up?
CAROLINE ELLISON: Yes, it is.
MR. COHEN: Okay. I just want to go look at a couple pieces there.
At the bottom, it said that——the last line, Brian, the last paragraph——"given the tightening in the crypto credit space," and the next line.
"We've returned most of our loans by now." By now being November 6th. Had Alameda returned most of its loans by then?
CAROLINE ELLISON: No. We had returned most of our third-party loans, but to do so we had taken out new loans from FTX.
MR. COHEN: So it had returned most of its third-party loans, correct?
CAROLINE ELLISON: That's right.
MR. COHEN: Going up to the paragraph on top of that.
MR. COHEN: If you could highlight that, Brian.
MR. COHEN: It says, "we obviously had hedges that aren't listed."
CAROLINE ELLISON: Mm-hmm.
MR. COHEN: Did Alameda in fact have hedges that were not listed on the balance sheet?
CAROLINE ELLISON: Yes, we did.
MR. COHEN: Okay. And going up to the very top, it says that "we have greater than $10 billion of assets that are not reflected there," there being the balance sheet. In fact, did Alameda have greater than 10 billion not reflected on the balance sheet?
CAROLINE ELLISON: Alameda did not; Sam personally did.
MR. COHEN: Okay. And FTX did.
CAROLINE ELLISON: If you're considering FTX equity as an asset——
MR. COHEN: Yes.
CAROLINE ELLISON: ——then yes, it——I mean, there was——Sam owned greater than $10 billion of FTX equity.
MR. COHEN: Okay. We can take that down.
MR. COHEN: Now if we can move forward during the week, there came a time that——well, let me back up.
Just to refresh everyone, who was CZ?
CAROLINE ELLISON: The CEO of Binance.
MR. COHEN: And Binance was the largest crypto exchange?
CAROLINE ELLISON: That's right.
MR. COHEN: Okay. There came a time that he put up a tweet with regard to FTT. Do you recall that?
CAROLINE ELLISON: Yes, I do.
MR. COHEN: Can we pull up Government Exhibit 874, please.
MR. COHEN: So in this exhibit, CZ is saying that Binance is planning to liquidate its remaining FTT; is that correct?
CAROLINE ELLISON: Uh-huh, yes, that's right.
MR. COHEN: Okay. And what was your reaction, or your response to that?
CAROLINE ELLISON: I was very concerned. I thought that this would cause the price of FTT to go down a lot and cause a lot of increased worry about the safety of assets on FTX and likely cause a lot of customers to withdraw from FTX.
MR. COHEN: Did you end up putting up a tweet responding to that?
CAROLINE ELLISON: Yes, I did.
MR. COHEN: Okay. Can we put that one up. Can we put up GX 876.
MR. COHEN: This was the tweet you put up in response to CZ's tweet, correct?
CAROLINE ELLISON: That's right.
MR. COHEN: Okay. And you said that "Alameda would happily buy all of your FTT for $22."
CAROLINE ELLISON: Yes, I did.
MR. COHEN: Okay. Now $22 was the market price of FTT, correct?
CAROLINE ELLISON: I don't remember what the exact price was around the time, but I think it was somewhere around $22.
MR. COHEN: All right. In fact, 22 had been the six-month low; is that correct?
CAROLINE ELLISON: I don't remember.
MR. COHEN: Now did you really think that CZ was planning to buy these——sell these shares?
MS. SASSOON: Objection.
JUDGE KAPLAN: Ground?
MS. SASSOON: Calls for speculation about CZ's plans.
JUDGE KAPLAN: Why is it relevant, Mr. Cohen?
MR. COHEN: It's relevant to the response to the tweet, your Honor.
JUDGE KAPLAN: Sustained.
BY MR. COHEN:
MR. COHEN: Did you have any discussions with Mr. Bankman-Fried about how to respond to the tweet?
CAROLINE ELLISON: Yes, we did.
MR. COHEN: Okay. Did those discussions include the topic of whether CZ was really going to sell?
CAROLINE ELLISON: I don't recall. I know it did include the topic of CZ's motivations in sending the tweet.
MR. COHEN: Okay. Well, tell us what you remember about that.
CAROLINE ELLISON: We——we both agreed that his motivations were most likely to try to hurt Alameda and FTX even if it was at the expense of getting a better price for his FTT.
MR. COHEN: Okay. Now let's move forward——you can take that down——to later in the week, and take a look at GX 21.
Ms. Ellison, what was the——what did GX 21 relate to?
CAROLINE ELLISON: This is a Google Doc or a document that Sam wrote about his plans to raise money for FTX.
MR. COHEN: And I want to focus on the first page, items 1 through 14.
MR. COHEN: At the top, Brian.
CAROLINE ELLISON: Mm-hmm.
MR. COHEN: Just the first page.
What was your understanding of what they referred to?
CAROLINE ELLISON: My understanding was that these were people that Sam or others were planning to ask about making an emergency investment into FTX.
MR. COHEN: So these were potential sources of capital?
CAROLINE ELLISON: Yes, that's right.
MR. COHEN: To keep FTX going as an ongoing business.
CAROLINE ELLISON: That's right.
MR. COHEN: Were you asked to contact anyone?
CAROLINE ELLISON: Yes, Sam asked me to contact Dustin Moskovitz.
MR. COHEN: That would be the person——where was he?
CAROLINE ELLISON: I don't know where he was at the time.
MR. COHEN: And also, if you look at No. 3, you were asked to contact Genesis.
CAROLINE ELLISON: Yes, I do recall Sam asking me to talk to Genesis.
MR. COHEN: Do you recall——yes or no——whether you contacted Genesis?
CAROLINE ELLISON: I was talking a lot to Genesis during this time period, but I——I don't recall if I brought up the issue of them investing in FTX. They were already, you know, trying to recall their loans from us.
MR. COHEN: What about Dustin?
CAROLINE ELLISON: Yeah, I did talk to him. Or sorry. Sorry. I talked to one of his representatives. I didn't talk to him directly.
MR. COHEN: About the topic of raising capital.
CAROLINE ELLISON: Yes, that's right.
MR. COHEN: All right. We can take that down.
MR. COHEN: Now you also testified that you participated in something you called an all hands meeting on November 9th. Do you recall that?
CAROLINE ELLISON: Yes, I do.
MR. COHEN: And those kinds of meetings were held on a regular basis; is that correct?
CAROLINE ELLISON: They were typically held every two weeks.
MR. COHEN: At Alameda.
CAROLINE ELLISON: Yes, that's right.
MR. COHEN: Who participated in those meetings?
CAROLINE ELLISON: All the employees at Alameda.
MR. COHEN: Okay. Where was Alameda's offices at the time?
CAROLINE ELLISON: Our main offices were in the Bahamas and in Hong Kong.
MR. COHEN: And where were you when this meeting took place?
CAROLINE ELLISON: I was in Hong Kong.
MR. COHEN: Now prior to the meeting did you have any conversations with Mr. Bankman-Fried or others?
MS. SASSOON: Objection.
JUDGE KAPLAN: It's a little broad.
MR. COHEN: Did you have any conversations with Mr. Bankman-Fried about what to discuss at the meeting?
CAROLINE ELLISON: Yes, I did.
MR. COHEN: What do you recollect about that?
MS. SASSOON: Objection, hearsay.
MR. COHEN: Let's pull up Government Exhibit 414A in evidence.
MR. COHEN: Now, Ms. Ellison, if you could just——let's call your attention to the top in blue. You say, "thinking about what to tell people at Alameda all hands. Right now I'm thinking a vibe of 'Alameda is probably going to wind down, if you don't want to stay or want to take some time off no pressure, if you do want to help with stuff like making sure our lenders get repaid it's super appreciated.'" And then you write, "does seem right?"
MR. COHEN: You can put it to normal size, Brian.
MR. COHEN: What did you mean by that?
CAROLINE ELLISON: What I meant was I was thinking about what to say at this meeting. A lot of the employees had been asking me what was going on, or what the implications were for them, and I was asking whether it made sense to express this to them that Alameda was going to wind down and that they shouldn't feel pressured to stay and continue working.
MR. COHEN: Was your goal to get them to stay?
CAROLINE ELLISON: No. I was hoping that some might stay, but I think if my goal had been to get them to stay, I would have told them to stay. I was trying to be honest and help them do whatever was in their best interest.
MR. COHEN: What was your goal going into this meeting?
CAROLINE ELLISON: My goal was to inform Alameda employees what had been going on and what the implications for them were.
MR. COHEN: And looking at the response from Mr. Bankman-Fried at the bottom, he says, "maybe something about there being a future of some sort for those who are excited but that you can't know for sure what it is." What was your understanding as to that, Ms. Ellison?
CAROLINE ELLISON: My understanding was that Sam was suggesting maybe he would start a new company or maybe Alameda would continue in some form and that he might want to hire Alameda employees for that.
MR. COHEN: Now did the meeting take place?
CAROLINE ELLISON: Yes, it did.
MR. COHEN: Now please answer my next question just by topic, not by what was said. Do you recall the topics you covered?
MR. COHEN: Can you tell us.
CAROLINE ELLISON: I recall telling employees how Alameda and FTX had gotten into that financial——into our financial situation, and I recall telling people that Alameda was likely going to wind down and they didn't need to keep working.
MR. COHEN: Did the topic——yes or no: Did the topic——
JUDGE KAPLAN: Excuse me. Had you finished your answer?
CAROLINE ELLISON: Yeah, those were the only topics that come to mind for the moment.
MR. COHEN: I'm sorry. I thought she had finished. I apologize.
JUDGE KAPLAN: Yes, of course you did. And she had.
BY MR. COHEN:
MR. COHEN: Did the topic of Alameda's accounting come up at all, yes or no?
CAROLINE ELLISON: I don't specifically remember.
MR. COHEN: Did the topic of the pointer system come up at all, yes or no?
CAROLINE ELLISON: I don't remember.
MR. COHEN: Did the topic of Alameda's interactions with its lenders come up, yes or no?
CAROLINE ELLISON: Yeah.
MR. COHEN: Now what happened after the meeting?
CAROLINE ELLISON: Sorry. Can you be more specific.
MR. COHEN: Sure. I think that's a fair point. A lot of things happened.
What happened in regard to the meeting? Did you discuss it with anyone afterward?
CAROLINE ELLISON: Yes, I——I think I told——I mentioned in this small group chat on Signal that I had had the meeting and conveyed these things to the employees and that I thought it had gone well.
MR. COHEN: Now in your view in this meeting were you revealing wrongdoing to the employees?
CAROLINE ELLISON: Yes, I was.
MR. COHEN: But you were also asking them to stay at the company.
CAROLINE ELLISON: I don't remember if I asked them to stay at the company. I said that it would be appreciated if they could help as we wound down and returned capital to our lenders.
MR. COHEN: Even after you told them about wrongdoing.
CAROLINE ELLISON: Yes, that's right.
MR. COHEN: Your Honor, may I have a moment.
JUDGE KAPLAN: Yes.
MR. COHEN: I have nothing further.
JUDGE KAPLAN: All right. Thank you.
Any redirect?
MS. SASSOON: Yes, your Honor.
REDIRECT EXAMINATION BY MS. SASSOON:
MS. SASSOON: Good afternoon, Ms. Ellison.
CAROLINE ELLISON: Good afternoon.
MS. SASSOON: I'd like to pick up on the subject of this all hands meeting in November. At that meeting what, if anything, did you explain to Alameda's employees about why there was a shortfall in FTX customer funds?
CAROLINE ELLISON: 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.
MS. SASSOON: Were you asked any follow-up questions by Alameda employees at this meeting?
CAROLINE ELLISON: Yeah, I was asked many follow-ups.
MS. SASSOON: And were you asked any questions related to who was involved in this wrongdoing that you described?
CAROLINE ELLISON: Yes, I was.
MS. SASSOON: And did you answer that question?
CAROLINE ELLISON: Yes, I said that Sam, Gary, Nishad, and I had been aware of the situation and the decision to repay loans with customer funds was Sam's.
MS. SASSOON: Do you recall in that meeting saying that "The decision was Sam's, I guess"?
MR. COHEN: Objection. Beyond the scope.
JUDGE KAPLAN: I'm sorry. I can't hear you.
MR. COHEN: I don't have my microphone.
JUDGE KAPLAN: Whoever is speaking.
MR. COHEN: Sorry. I need my microphone. Objection, beyond the scope.
MS. SASSOON: She was asked about this meeting, your Honor.
JUDGE KAPLAN: Yes, indeed. Overruled.
BY MS. SASSOON:
MS. SASSOON: Do you recall at this meeting saying the decision had been "Sam's, I guess"?
CAROLINE ELLISON: Yeah, I do.
MS. SASSOON: And why did you say "Sam's, I guess"?
CAROLINE ELLISON: It was a——the words I guess were a vocal tick. I felt sort of uncomfortable. I hadn't gone into the meeting intending to cast blame on anyone, but I also wanted to be honest and open in answering my employee's questions.
MS. SASSOON: And I believe you were asked this on cross-examination, but to be clear, did this meeting take place before you learned of any government investigation into wrongdoing?
CAROLINE ELLISON: Yeah, it did.
MS. SASSOON: Now were you aware of anyone recording this meeting while it was taking place?
CAROLINE ELLISON: No, I was not.
MS. SASSOON: Have you been played or heard any recording of this meeting?
CAROLINE ELLISON: No, though I've heard that a recording was made subsequently.
MS. SASSOON: And so is your testimony sitting here today based on your best recollection of that meeting?
CAROLINE ELLISON: Yes, that's right.
MS. SASSOON: You were asked on cross-examination about telling the defendant that the meeting went well afterwards?
CAROLINE ELLISON: That's right.
MS. SASSOON: Why, if you admitted in this meeting to wrongdoing, did you describe the meeting as having gone well?
CAROLINE ELLISON: Because employees seemed, I mean, upset about the wrongdoing but they seemed grateful that I had been open and honest with them, and I felt good that I had disclosed this to employees.
MS. SASSOON: You were asked by Mr. Cohen about an earlier document to Alameda employees from months or maybe even a year earlier that you described as misleading Alameda employees about Alameda's positive situation. Do you recall those questions?
CAROLINE ELLISON: Yes, I do.
MS. SASSOON: And if at back in that time you had been misleading your employees, why did you come clean at this meeting, in November?
MR. COHEN: Objection.
JUDGE KAPLAN: Sustained.
MS. SASSOON: Why, if as you testified you had made misleading statements to your employees in the past, why at this meeting did you, as you described it, disclose wrongdoing?
CAROLINE ELLISON: Yeah, I mean, I didn't——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. By the time of this all hands November——meeting in November, it had already happened, so I felt free to be honest with employees at that point, as, I mean, I had wanted to before but felt like I couldn't.
MS. SASSOON: You were asked some questions on cross-examination about the different attitudes you and the defendant had about risk. Do you recall that?
CAROLINE ELLISON: Yeah.
MS. SASSOON: And you were asked about the defendant's decision to start FTX, which you had disagreed with. Do you recall that?
CAROLINE ELLISON: Yeah.
MS. SASSOON: And I believe Mr. Cohen asked you if in hindsight you viewed the risks that he took there as correct. Do you remember that?
CAROLINE ELLISON: Yeah.
MS. SASSOON: What about in 2022? Do you view the risks that were taken in 2022 by the defendant as correct?
CAROLINE ELLISON: No, I think they were terrible mistakes.
MS. SASSOON: You were asked some questions about the defendant's absences from Alameda in 2020. Do you recall that?
CAROLINE ELLISON: Yes, I do.
MS. SASSOON: How did that compare to the defendant's level of engagement in Alameda from May of 2022 onward?
CAROLINE ELLISON: In May of 2022, he started becoming much more engaged in Alameda than he had been for the past months. The fact that we were losing a lot of money naturally made him much more, you know, concerned and wanting to keep closer track of what was going on.
MS. SASSOON: Mr. Bianco, can you pull up Government Exhibit 64.
MS. SASSOON: Ms. Ellison, you were shown this document a number of times on cross-examination. Is this an update document you sent to the defendant in late 2021?
CAROLINE ELLISON: Yes, it is.
MS. SASSOON: And if we could just focus on "notable idiosyncratic pnl stuff," the third black bullet, and highlight that section. Zoom in on that section.
MS. SASSOON: Can you just remind us what "notable idiosyncratic pnl stuff" refers to.
MR. COHEN: Objection. Beyond the scope.
MS. SASSOON: Your Honor, this document was pulled up numerous times on cross.
MR. COHEN: Not that section.
JUDGE KAPLAN: Just give me a moment.
MS. SASSOON: To the extent it's relevant, I plan to ask about the fifth bullet, the fifth white bullet.
And your Honor, there's another basis beyond just this document being shown that the door was opened to this on cross.
JUDGE KAPLAN: Please give me a moment.
What's the other basis?
MS. SASSOON: Ms. Ellison was asked about her guilty plea to investor fraud, and this bullet pertains to the defrauding investors.
JUDGE KAPLAN: Overruled.
BY MS. SASSOON:
MS. SASSOON: Ms. Ellison, I'd like to direct your attention to the fifth bullet that says "negative 850m from BTMX thing." What does that refer to?
CAROLINE ELLISON: That refers to losses that FTX sustained and then passed on to Alameda in early 2021 from a malfunctioning in the FTX margin system.
MS. SASSOON: And what, if anything, did the defendant say to you about transferring that loss to Alameda?
CAROLINE ELLISON: He said that he didn't want the loss on FTX's books, that it would look bad to investors.
MS. SASSOON: You can take that down.
MS. SASSOON: On cross-examination Mr. Cohen asked you a question related to a $65 billion line of credit for Alameda. Do you recall that?
CAROLINE ELLISON: Yeah.
MS. SASSOON: During your time at Alameda did anyone ever tell you that Alameda had a $65 billion line of credit with FTX?
CAROLINE ELLISON: Not that I can recall.
MS. SASSOON: Did you specifically request or authorize a $65 billion line of credit for Alameda?
MS. SASSOON: You were asked some questions about Government Exhibit 44.
MS. SASSOON: Mr. Bianco, if you could please pull up that exhibit and display the main tab alongside the Alt 7 tab.
MS. SASSOON: And like Mr. Cohen, I'm not going to go through this whole spreadsheet again.
Mr. Cohen asked you about the total NAV on this spreadsheet. Do you recall that?
CAROLINE ELLISON: Yeah.
MS. SASSOON: How did the total assets and total liabilities on the main tab and Alt 7 compare?
CAROLINE ELLISON: They were quite different. On the main tab there's $21 billion of assets and 15 billion of liabilities; on the Alt 7 tab, there is 16.5 billion of assets and 10 billion of liabilities.
MS. SASSOON: And what effect, if any, did that have on the appearance of Alameda's NAV, and the strength of that NAV?
CAROLINE ELLISON: It——having the assets and the liabilities lower makes Alameda look like it's in a less risky position than it actually is.
MS. SASSOON: And why is that, even if the NAV is 6 billion on both?
MR. COHEN: Objection. Asked and answered.
JUDGE KAPLAN: Overruled.
CAROLINE ELLISON: Because the——having——having more loans and then having the assets that were borrowed invested in illiquid investments makes it harder for Alameda to repay those loans if they're called.
MS. SASSOON: We can take that down.
MS. SASSOON: You were asked some questions about CZ potentially trying to harm FTX in November.
Do you recall that?
CAROLINE ELLISON: Yeah.
MS. SASSOON: In your view, did FTX collapse because of a tweet from CZ?
CAROLINE ELLISON: I wouldn't say that was the main reason, but I think it contributed to the situation.
MS. SASSOON: What would you say was the main reason?
CAROLINE ELLISON: I would say the main reason was the fact that Alameda had borrowed over $10 billion of FTX customer funds that it wasn't able to repay.
MS. SASSOON: Since the events of mid-November 2022, have you spoken with the defendant?
CAROLINE ELLISON: No, not since mid-November 2022.
MS. SASSOON: What about with Gary Wang?
MS. SASSOON: What about with Nishad Singh?
MS. SASSOON: You were asked some questions about not resigning from Alameda.
Do you remember that?
CAROLINE ELLISON: Yeah.
MS. SASSOON: Did you consider resigning in the summer or fall of 2022?
CAROLINE ELLISON: Yeah, I did.
MS. SASSOON: Ms. Ellison, why didn't you resign?
CAROLINE ELLISON: I told Sam that I wanted to quit, and he told me that I couldn't, that I was too important to keep at Alameda, and he thought I needed to stay at Alameda.
MS. SASSOON: After he told you that, why didn't you resign?
CAROLINE ELLISON: Because I trusted his opinion, and I didn't want FTX and Alameda to collapse. If he thought that my resigning might cause that, then I didn't want to do that.
MS. SASSOON: No further questions.
JUDGE KAPLAN: Thank you.
Any recross?
MR. COHEN: No, your Honor.
JUDGE KAPLAN: The witness is excused. Thank you.