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Did Accounting Firms Refuse to Audit Alameda’s Books?

Date:

Caroline Ellison, who plays a crucial role in the
case against FTX’s Founder Sam Bankman-Fried (SBF), faced intense
cross-examination by the defense as she testified against her former boss. The
trial highlighted complex events that led to the collapse of FTX and
Alameda Research.

Ellison, a key witness and SBF’s former girlfriend, provided a detailed account of her early days at Alameda Research,
highlighting the exchange’s internal accounting practices. One notable point in
her testimony, as reported by Coindesk, was Alameda’s struggle with
accountants. From 2021 to 2022, the hedge fund allegedly engaged with several
accounting firms, only to discover that they were unable or unwilling to audit
the company’s books.

These findings emerged during Ellison‘s
questioning by the defense lawyer Mark Cohen. Initially, the responsibility for
preparing Alameda’s balance sheets rested with FTX’s former Digital Markets CEO, Ryan Salame. However, at some point, Ellison took charge of this task.

This cross-examination also delved into Ellison’s
early days at Alameda Research, where she acknowledged employee disputes before
joining in 2018. While the exact details of these disputes were not clear
during the trial, it was clear that they were a significant part of Alameda’s
operations.

Additionally, Ellison’s ambition became a focal
point of discussion during her testimony. While she initially viewed herself as
lacking ambition in her career, her time at Alameda saw a shift in her outlook.
She recounted how SBF’s encouragement had spurred her to become
more ambitious during her tenure at the company.

During her cross-examination, Ellison
encountered intense questioning from Mark Cohen, SBF’s lawyer, CNBC
reported. Cohen’s persistent interruptions and requests for sidebar conferences during the hearing drew the attention of Judge Lewis Kaplan. Throughout her testimony, Ellison
maintained a demeanor that often avoided eye contact with the defendant, a trend
that continued from the previous days of the trial.

Defense Cross-Examines Ellison

Ellison’s testimony also delved into the working
dynamics at Alameda, particularly her collaboration with Sam Trabucco, who
served as the Co-CEO until August 2022. Ellison and Trabucco took on the
day-to-day responsibilities in the firm as early as 2020. By 2021,
SBF’s involvement at Alameda had notably reduced, and Ellison took on
more of the company’s responsibilities.

As Ellison’s testimony continued, Cohen cross-examined
the internal account that FTX used to mark customer funds deposited into Alameda
Research’s bank accounts, referred to as [email protected], Reuters reported. SBF
had cited this internal labeling issue as a cause of the shortfall of funds
before his arrest.

Ellison, a 28-year-old Stanford University graduate,
is one of three former members of SBF’s inner circle who have admitted guilt to fraud charges and agreed to cooperate with the Manhattan U.S. Attorney’s
office. Earlier in the trial, Gary Wang, FTX’s former technology chief,
testified regarding SBF’s misleading tweets about the status of the crypto exchange when there was a surge in demand for withdrawals.

Caroline Ellison, who plays a crucial role in the
case against FTX’s Founder Sam Bankman-Fried (SBF), faced intense
cross-examination by the defense as she testified against her former boss. The
trial highlighted complex events that led to the collapse of FTX and
Alameda Research.

Ellison, a key witness and SBF’s former girlfriend, provided a detailed account of her early days at Alameda Research,
highlighting the exchange’s internal accounting practices. One notable point in
her testimony, as reported by Coindesk, was Alameda’s struggle with
accountants. From 2021 to 2022, the hedge fund allegedly engaged with several
accounting firms, only to discover that they were unable or unwilling to audit
the company’s books.

These findings emerged during Ellison‘s
questioning by the defense lawyer Mark Cohen. Initially, the responsibility for
preparing Alameda’s balance sheets rested with FTX’s former Digital Markets CEO, Ryan Salame. However, at some point, Ellison took charge of this task.

This cross-examination also delved into Ellison’s
early days at Alameda Research, where she acknowledged employee disputes before
joining in 2018. While the exact details of these disputes were not clear
during the trial, it was clear that they were a significant part of Alameda’s
operations.

Additionally, Ellison’s ambition became a focal
point of discussion during her testimony. While she initially viewed herself as
lacking ambition in her career, her time at Alameda saw a shift in her outlook.
She recounted how SBF’s encouragement had spurred her to become
more ambitious during her tenure at the company.

During her cross-examination, Ellison
encountered intense questioning from Mark Cohen, SBF’s lawyer, CNBC
reported. Cohen’s persistent interruptions and requests for sidebar conferences during the hearing drew the attention of Judge Lewis Kaplan. Throughout her testimony, Ellison
maintained a demeanor that often avoided eye contact with the defendant, a trend
that continued from the previous days of the trial.

Defense Cross-Examines Ellison

Ellison’s testimony also delved into the working
dynamics at Alameda, particularly her collaboration with Sam Trabucco, who
served as the Co-CEO until August 2022. Ellison and Trabucco took on the
day-to-day responsibilities in the firm as early as 2020. By 2021,
SBF’s involvement at Alameda had notably reduced, and Ellison took on
more of the company’s responsibilities.

As Ellison’s testimony continued, Cohen cross-examined
the internal account that FTX used to mark customer funds deposited into Alameda
Research’s bank accounts, referred to as [email protected], Reuters reported. SBF
had cited this internal labeling issue as a cause of the shortfall of funds
before his arrest.

Ellison, a 28-year-old Stanford University graduate,
is one of three former members of SBF’s inner circle who have admitted guilt to fraud charges and agreed to cooperate with the Manhattan U.S. Attorney’s
office. Earlier in the trial, Gary Wang, FTX’s former technology chief,
testified regarding SBF’s misleading tweets about the status of the crypto exchange when there was a surge in demand for withdrawals.

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