Sam Bankman-Fried’s Business Partner, Reported Ex-Girlfriend Alleges He Received Billions In Secret Loans

Photo by Michael M. Santiago/Getty Images

James Lynch Contributor
Font Size:

Disgraced former crypto billionaire Sam Bankman-Fried allegedly took billions in secret loans from crypto hedge fund Alameda Research, the firm’s former CEO Caroline Ellison said during a hearing Dec. 19, according to an unsealed transcript cited by multiple outlets.

Ellison said she agreed with Bankman-Fried not to disclose to investors that Alameda could borrow unlimited amounts of money from Bankman-Fried’s crypto exchange FTX, according to an unsealed transcript cited by Reuters. Ellison pleaded guilty to seven counts of fraud and conspiracy, according to the outlet.

“We prepared certain quarterly balance sheets that concealed the extent of Alameda’s borrowing and the billions of dollars in loans that Alameda had made to FTX executives and to related parties,” Ellison told a Manhattan judge, according to the transcript cited by Reuters.

“I also understood that many FTX customers invested in crypto derivatives and that most FTX customers did not expect that FTX would lend out their digital asset holdings and fiat currency deposits to Alameda in this fashion,” she continued, The Wall Street Journal (WSJ) reported, citing the unsealed transcript.

Ellison faced a maximum of 110 years in prison before she agreed to cooperate with authorities, according to her plea agreement. She was released on a $250,000 bond after pleading guilty. Her charges include wire fraud, money laundering and securities fraud, the agreement shows.

Ellison could serve as a cooperating prosecution witness in the case against Bankman-Fried, Reuters reported. Ellison and Bankman-Fried had a rumored relationship when the two lived with other FTX and Alameda executives in a Bahamas penthouse, according to multiple reports.

Former FTX Chief Technology Officer Gary Wang pleaded guilty in a separate hearing Dec. 19 and is cooperating with prosecutors, according to Reuters. Wang said Bankman-Fried instructed him to alter FTX’s code to grant Alameda special capabilities on the platform, the outlet reported.

Federal prosecutors indicted Bankman-Fried on eight counts of fraud and conspiracy Dec. 13. He was released on a $250 million bond Thursday and was ordered to stay in his parents’ house in Palo Alto, California, until his next court hearing, which is scheduled for Jan. 3. (RELATED: Dem-Aligned PACs Are Radio Silent On Returning Nearly $30 Million In SBF Donations)

Bankman-Fried “agreed with others to defraud customers of by misappropriating those customers’ deposits and using those deposits to pay expenses and debts of Alameda Research, Bankman-Fried’s proprietary crypto hedge fund, and to make investments,” according to the unsealed indictment

The Securities and Exchange Commission (SEC) and Commodities Futures Trading Commission (CFTC) have leveled similar civil complaints against Bankman-Fried, who has maintained he did not knowingly commit fraud.

Bankman-Fried’s net worth peaked at $26.5 billion and was estimated to be $17.2 billion in September 2022, with most of his fortune tied to FTX and Alameda, according to Forbes Magazine. In November, he told Axios he had less than $100,000 left in his bank account the last time he checked.