New FTX CEO John J Ray has stated that Alameda had access to FTX customer assets and could use them for its own purposes without proper oversight.
Former Alameda Research CEO Caroline Ellison has revealed that she did not feel well suited to leading the hedge fund. This is according to a Thursday New York Post article citing the former exec’s diary. Ellison was in December charged with fraud in relation to the November collapse of Alameda’s sister company FTX crypto exchange.
Ellison, who was romantically linked to then FTX CEO Sam Bankman-Fried, has been named a key witness in the former’s October trial. She was hand-picked by Bankman-Fried, known in crypto circles as SBF, to run the hedge fund. According to the report, the day that the leading crypto exchange collapsed, Ellison made a diary entry that said it “feels great”. Ellison wrote:
“Running Alameda doesn’t feel like something I’m that comparatively advantaged at or well suited to do.”
Ellison’s Alameda Research was implicated in the FTX collapse because of the intermingling of funds between the companies. New FTX CEO John J Ray has stated that Alameda had access to FTX customer assets and could use them for its own purposes without proper oversight. According to Ray, whose previous experience includes helping manage Enron after the energy trader’s 2001 bankruptcy – FTX’s failure was caused by “a very small group of grossly inexperienced and unsophisticated individuals”.
FTX Sues Former Executives in Bid to Recoup $1 Billion
Meanwhile, the bankrupt crypto exchange is suing former executives in a bid to recover $1 billion that they allegedly misappropriated. The complaint, filed in Delaware bankruptcy court names Sam Bankman-Fried, Caroline Ellison, former FTX technology chief Zixiao “Gary” Wang, and former FTX engineering director Nishad Singh. The suit alleges that the group used company funds to bankroll luxury accommodations, political donations, speculative investments, and other “pet projects”, all the while committing “one of the largest financial frauds in history”.
SBF is facing several criminal charges and has pleaded not guilty while Ellison, Wang, and Singh have pleaded guilty and agreed to assist prosecutors. According to the complaint by FTX, the illicit transfers include over $750 million of equity that FTX and SBF-controlled West Realm Shires awarded “without receiving any value in exchange”. A further $546 million was used by SBF and Wang to buy Robinhood Markets share while Ellison paid herself bonuses amounting to $28.8 million. The funds were allegedly misappropriated between February 2020 and November 2022. The complaint states that according to the US bankruptcy code, the transfers can be undone.