Caroline Ellison confirmed that Alameda Research allegedly bribed Chinese officials to unlock accounts. Aditya Barathwaj, a former programmer at the trading company, claims Alameda Research lost at least $190 million due to lax security practices.
Caroline Ellison continued her testimony yesterday, confronting the man who was her partner for several years. Former CEO of Alameda Research accused Sam Bankman-Fried of corruption, in connection with the Chinese government. The case dates back to 2020, when accounts linked to FTX and hosted on the OKX and Huobi platforms were frozen.
The accounts were suspected of being used for money laundering. Caroline Ellison explained that FTX/Alameda Research sent a large sum of money to high-ranking people in China to make this problem go away.
Still, according to the former CEO of Alameda Research, the FTX and Alameda teams considered several solutions to recover these accounts. which contained a billion dollars in cryptocurrency. In the end, David Ma, a member of the FTX teams who is Chinese, and who “had connections,” according to Caroline Ellison, was able to find people to send this sum to.
Meanwhile, Sam Bankman-Fried’s Alameda Research lost at least $190 million due to lax security practices, a former programmer at the trading company claims.
Aditya Barathwaj recalled that after the collapse of FTX and its subsidiary Alameda, there was a lot of talk about the deficiencies of the risk management structures in both companies. John Ray, who ran the exchange during the bankruptcy, called the situation “a complete failure of corporate control.”
FTX and Alameda Knew They Had to Cover Their Tracks
David Ma and Caroline Ellison allegedly made transfers of 100 to 150 million dollars in cryptocurrencies, which allowed the accounts in which the money belonging to FTX was present to be unlocked. Such situation, though, would have caused the departure of a trader from Alameda Research, who refused to be associated with these events.
At that point, FTX and Alameda Research were obviously already covering their tracks. Sam Bankman-Fried allegedly ordered colleagues to use the Signal messaging service to discuss sensitive topics, which could be deleted after a week. Caroline Ellison also showed notes taken at the time, written vaguely so as not to arouse suspicion.
His former partner as well as FTX co-founder Gary Wang pleaded guilty and agreed to cooperate with the prosecution, in exchange for a reduced sentence. Caroline Ellison faces up to 110 years in prison.
Former Alameda Employee Spoke About Company’s $190 Million Loss Due to Negligence
Yesterday, Aditya Barathwaj posted on X the following:
“SBF believed that the single most important thing for a startup like Alameda or FTX was being able to move very, very fast
So much so that he decided to ignore engineering and accounting practices that are considered standard at tech companies and financial services firms.”
According to him, this approach has effectively enabled development at “breakneck speed.” But the downside was the security incidents that occurred every few months.
In one case, an Alameda merchant was subjected to a phishing attack, as a result of which the company lost $100 million. While trying to complete a DeFi transaction, the employee clicked on a fake link, which Google search showed at the top.
Barathwaj emphasized that there were many more similar cases, even before he joined the company. Alameda responded throughout, implementing fixes to its security and risk management systems on the fly. Barathwaj previously revealed he had caused the Bitcoin rate to drop by 87% on the Binance.US platform in 2021.
By Leonardo Pérez
