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Sam Bankman-Fried’s trial progresses into its third week, and notable testimonies have marked its course. Caroline Ellison, the ex-CEO of Alameda Research and Sam Bankman-Fried’s former partner, has been one of the major witnesses as week 2 of the trial comes to an end. She disclosed various activities including Alameda’s ability to draw unlimited loans from FTX customer accounts, and Bankman-Fried’s alleged Chinese official bribes, his political contributions, and unsuccessful attempts to secure Saudi investments.
On day 8, Zac Prince, the ex-CEO of the defunct crypto firm BlockFi, took the stand and was vocal about his firm’s downfall. He alleges that FTX and Alameda’s actions were the primary catalysts. Elaborating on this, Prince revealed that BlockFi had loaned out $5 to $10 billion industry-wide. Specifically, by May 2022, Alameda had borrowed $1.1 billion from BlockFi. However, after Terra LUNA’s downfall and subsequent bankruptcies of Voyager and Celcius, BlockFi suffered huge losses.
To salvage the situation, BlockFi considered a merger with FTX. In response, FTX proposed a $400 million credit and expressed an interest in completely owning BlockFi by mid-2023. Prince further noted that between July and November 2022, BlockFi had lent Alameda an additional $850 million.
Prince’s main contention was that had he known about the internal transactions between Alameda and FTX, BlockFi wouldn’t have risked lending to Alameda. As matters worsened and the FTT token value plummeted, BlockFi struggled to recover loans, leaving a debt of $650 million. The culmination was BlockFi’s declaration of bankruptcy with a staggering $1.1 billion on FTX’s platform.
To add more clarity to the trial, prosecutors have announced that Nishad Singh, former co-lead engineer of FTX, is set to testify next week.