FTX trouble begins to clear the air as more accounts come forward with their statements. Caroline Ellison, the former Chief Executive Officer of Alameda Research, pleaded guilty recently, admitting that she was aware of the activities that were taking place from 2019 to 2022.
According to the statement, she knew what was happening was wrong.
Reportedly, Alameda Research was granted unlimited access to the borrowing facility of FTX. In other words, Alameda had unrestricted access to the line of credit without maintaining the basic balance or showing post-collateral. The arrangement between Ellison and Bankman-Fried was to conceal the activities and manipulate the books to not show the negative balance at Alameda.
It was an attempt to hide that Alameda was borrowing from FTX without being subject to any margin call.
Gary Wang, the co-founder of FTX, pleaded guilty and provided a statement. Both are currently collaborating with federal prosecutors in Manhattan over fraud charges.
Sam Bankman-Fried is free on a $250 million bond, but he is still under investigation for defrauding the money and squandering it for his own expenditures. According to a separate statement by Ellison, she agreed with Sam not to promote the fact that the funds used by Alameda were to FTX consumers.
Wang’s statement highlights that he was directed to make changes to the code of the platform to give Alameda special privileges. Wang, FTX’s former Chief Technology Officer, asserts that customers and investors were undoubtedly misled.
The recent statements are very different from what was said earlier. For instance, Ellison had earlier said that Alameda does not get the special privilege because both platforms are at arm’s length. Sam Bankman-Fried has also initially denied being aware of such activities, saying that he was unaware of the activities that led to the bankruptcy of the platform.
The curtains have been raised, and the case nears its end. Wang and Ellison have come forward with their statements. Given the pace, it is only a matter of months before all the concerned parties face the consequence of their actions.
FTX was once driven by the passion of a young founder. It had the potential to travel long distances if not for the liquidity crisis. Being founded in 2019 meant that the list of over 180 cryptocurrencies could have still accommodated a larger number of digital tokens in the coming days. FTX exchange now struggles to win the trust back of its customers. This has affected the crypto market in an overall sense. One example is the price of BTC, which is down to $13,863.50 by 0.32% at the time of writing.
The liquidity crisis made it difficult for customers to withdraw their funds. More statements could come up as the case moves forward in the days to come. FTX now has to do something marvelous to regain what it has lost.