On Wednesday, former Alameda CEO Caroline Ellison testified that a tweet from Binance’s Changpeng Zhao played a partial role in the fall out of the crypto exchange, FTX.
Ellison blamed the November 6th tweet announcing Binance would sell its FTX Token holdings.
According to Ellison, the liquidation alert prompted a run on FTX by retail investors that proved fatal. But she maintained that the main reason was Alameda improperly borrowing $10 billion from FTX.
On November 11th, FTX halted withdrawals and filed for bankruptcy after the customer exodus. CZ has previously contested that his tweet alone destroyed FTX, citing liquidity issues.
During SBF’s trial, Ellison also provided dramatic testimony on day seven of Sam Bankman-Fried’s criminal trial. She took a plea deal to cooperate with prosecutors alleging SBF misused FTX customer funds.
The former Alameda CEO also claimed SBF wanted to be US president and looked to Saudi investors. And she admitted providing misleading financials to creditors.
Under cross-examination, Ellison conceded SBF may not have known specifics around Alameda’s FTX loans. But prosecutors challenged that assertion as vague.
Her statements have provided an inside look at questionable practices behind the scenes as FTX rose to prominence. Ellison continues testifying as prosecutors aim to prove SBF defrauded investors before FTX’s stunning collapse.
SBF has pleaded not guilty to charges of fraud and conspiracy. Ellison’s account suggests that while CZ’s tweet may have added fuel, reckless decisions had already doomed FTX despite its meteoric growth.
Also Read: Caroline Ellison Says SBF Directed Her to Commit Fraud
