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Caroline Ellison the woman who helped run Alameda Research is a woman of high interest to the feds. Ellison is also a woman who is understood to be cooperating with federal authorities amid the investigation into just how deep Sam Bankman-Fried ‘s fraud really went and why. According to reports, testimony initially given to the feds has revealed that Ellison has copped to the fact that she knew her actions were illegal and had almost an unlimited line of credit to the stolen funds from FTX customers.

In the same court testimony, Ellison also provided federal authorities testimony that both she and Bankman-Fried knew what they were doing was illegal. She also admitted to the fact that the twosome willingly worked together to conceal their arrangement despite having made it look like the two companies were separate to the general public and regulators.

FTX wildly collapsed in November after illegally loaning billions in stolen funds to Alameda Research instead of keeping them secure for clients and customers. In case it couldn’t get any worse, she also revealed that they funded several of their own investments with money from third parties in the crypto and investment community that had funded them who couldn’t get their initial monies back.

Instead they are understood to have used FTX customer funds to pay back their bills and responsibilities all the while having kept up their stunning fraud.

Ellison told the court according to several reports ‘I was aware that Alameda was provided access to a borrowing facility on FTX.com, the cryptocurrency exchange run by Mr. Bankman-Fried.

‘I understood that FTX executives had implemented special settings on Alameda’s FTX.com account that permitted Alameda to maintain negative balances in various fiat currencies and crypto currencies.

‘In practical terms, this arrangement permitted Alameda access to an unlimited line of credit without being required to post collateral, without having to pay interest on negative balances and without being subject to margin calls or FTX.com’s liquidation protocols.

‘I understood that if Alameda’s FTX accounts had significant negative balances in any particular currency, it meant that Alameda was borrowing funds that FTX’s customers had deposited onto the exchange.’

She added: ‘From in and around July 2022 through at least October 2022, I agreed with Mr. Bankman-Fried and others to provide materially misleading financial statements to Alameda’s lenders.

‘In furtherance of this agreement, for example, we prepared certain quarterly balance sheets that concealed the extent of Alameda’s borrowing and the billions of dollars in loans that Alameda had made to FTX executives and to related parties.

‘I also understood that FTX had not disclosed to FTX’s equity investors that Alameda could borrow a potentially unlimited amount from FTX, thereby putting customer assets at risk.

‘I agreed with Mr. Bankman-Fried and others not to publicly disclose the true nature of the relationship between Alameda and FTX, including Alameda’s credit arrangement.’

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