New revelations have emerged from the ongoing criminal trial against Sam “SBF” Bankman-Fried, the former CEO of the crypto exchange FTX. In court, evidence was presented that suggests SBF believed Binance, another prominent exchange, may have leaked Alameda’s balance sheet to the media in 2022.
Caroline Ellison, former CEO of Alameda Research, testified on October 11 and shared a memo dated November 6, 2022. This memo detailed potential investors and other parties to contact for financial assistance. According to this document, Bankman-Fried expressed concerns about Binance’s actions, which he perceived as part of a public relations campaign against FTX.
The memo alleged that Binance had “leaked a balance sheet, blogged about it, fed it to Coindesk, and then publicly announced that they were selling $500 million of FTX Token (FTT) in response, all while cautioning customers to be wary of FTX.” This sequence of events, particularly the report about Alameda’s balance sheet, played a crucial role in the chain of events that led to FTX’s run and eventual bankruptcy.
Ellison: Sam said someone else should tweet. I didn't want to, it would be false.
— Inner City Press (@innercitypress) October 11, 2023
AUSA: GX 875. Do you recognize this?
Ellison: They are my tweets that day. I wrote, "We have hedges that aren't listed."
AUSA: Was the tweet misleading?
Ellison: Yes, I think it was
The document also disclosed that while FTX was well-capitalized, it faced liquidity issues. Out of the $12 billion in client assets supposedly held by the exchange, only $4 billion was readily available for processing withdrawals.
Furthermore, the memo indicated that Justin Sun, founder of the Tron network and an adviser to Huobi, was a potential investor. However, it also noted his close association with Changpeng Zhao (CZ), the CEO of Binance.
Ellison, who has been a key witness in the trial, shared that she was “stressed” when CZ tweeted about liquidating his FTX Token (FTT) holdings. This tweet had a significant impact on the FTX Token’s value and the overall situation.
This trial marks the second week of Bankman-Fried’s legal proceedings, during which he faces seven charges related to conspiracy and fraud linked to the collapse of FTX. He has maintained his plea of not guilty. A second trial is scheduled for March 2024, where SBF will face six additional charges, including bank fraud and foreign bribery conspiracy charges. As the trial unfolds, our reporters will continue to provide the latest updates from the courtroom.