The Sam Bankman- Fried blockbuster trial took another turn this past week, as his on/off girlfriend and former Alameda Research CEO Caroline Ellison took the stand, as well as Christian Drappi, a former software engineer at Alameda. Both individuals reportedly had inside information about the immoral acts carried out by SBF, which led to the bankruptcy of both FTX – one of the most popular crypto exchange platforms at the time – and Alameda Research. Their testimony comes almost a year after the debacle of early November 2022, with SBF now facing seven federal fraud charges as a result, although the former crypto mogul has pleaded not guilty to every accusation. 

Ellison and Drappi were asked to testify and were posed questions regarding a now infamous recording of a Hong Kong meeting in which the realization occurred that FTX was facing impending doom. This was of course the beginning of the end for the disgraced mogul, as FTX found itself devoid of funds once crypto prices fell and users started withdrawing as a result. Drappi, for example, can be heard on the tape asking how FTX will pay back their users who lost millions of dollars, while Ellison stated that “FTX basically always allowed Alameda to, like, borrow user funds, as far as I know.” 

Drappi can also be heard in the audio recording how long Ellison had known about this borrowing, and was stunned at the extent that Alameda, for whom he worked, was intertwined with FTX, and resigned the following day. Needless to say, the fact that essentially every accessory and/or person with inside knowledge of what went down in November 2022 at FTX and Alameda is fully collaborating with the authorities spells bad news for SBF, who could face over 100 years in prison if found guilty on all charges. We will have to wait some more before we can figure that out exactly, however.  

The FTX-Alameda case has been in the spotlight for several months, as it is the first high-profile case of misappropriation of funds by a major crypto exchange. FTX’s valuation had reached as high as $32 billion under SBF’s tenure, and Alameda looked like the kind of firm that would be able, in the future, to spend millions on research campaign and to fund electoral campaigns, which was one of SBF’s main stated goals. Why Bankman-Fried essentially threw all these promising developments away is a question only he – and perhaps Ellison, who knew him both personally and professionally – can answer.