Sam Bankman-Fried's trial to resume with more testimony from Caroline Ellison

investing.com:

By Jody Godoy and Luc Cohen

NEW YORK (Reuters) — Caroline Ellison, the former co-head of Sam Bankman-Fried's hedge fund and a pivotal witness in his trial on fraud charges tied to the collapse of his FTX cryptocurrency exchange, is scheduled to retake the stand on Wednesday morning.

Ellison, the former co-chief executive of Alameda Research, testified on Tuesday that she was part of a multibillion-dollar conspiracy led by Bankman-Fried to defraud FTX customers, investors and lenders.

She is one of three former members of Bankman-Fried's inner circle who have pleaded guilty to fraud charges and agreed to cooperate with the Manhattan U.S. Attorney's office.

Ellison said the hedge fund took about $10 billion in FTX customer funds to repay its debts and make investments. The fund gained the money through a $65 billion line of credit it had on the exchange, and from funds FTX customers deposited into an Alameda bank account when FTX lacked its own account, she said.

The 28-year-old Stanford University graduate told jurors Bankman-Fried, her former boss and sometime romantic partner, shrugged off the risk of Alameda's lending and investment strategies, which relied on loans from crypto lenders who could demand repayment at any time.

«He described himself as truly risk-neutral,» whereas most people saw themselves as risk-averse, she said.

Prosecutors say Bankman-Fried plundered billions in customer funds to prop up Alameda, buy real estate and donate more than $100 million to U.S. political campaigns before FTX declared bankruptcy in November 2022 following a collapse that shocked financial markets and left his reputation in tatters.

Bankman-Fried has pleaded not guilty to two counts of fraud and five counts of conspiracy,