At the trial of Sam Bankman-Fried on Wednesday, former Alameda Research CEO Caroline Ellison testified that the cryptocurrency trading firm paid Chinese officials to have their Alameda trading accounts unlocked on OKX and Huobi in China.
Judge Lewis Kaplan noted that the defendants were not accused of bribing Chinese officials in this case and that the evidence was provided for a "limited show of trust and confidence" and the "motive" between Bankman-Fried and Ellison.
Ellison testified that Bankman-Fried was CEO in 2020, when accounts worth about $1 billion were frozen. But in November 2021, Bankman-Fried said one of his colleagues, David Ma, "was Chinese and had connections," and he found a way to unfreeze the account, Ellison testified. When the freeze was resolved, Ellison was Alameda's co-CEO alongside Sam Trabucco.
Bankman-Fried appeared distracted, looking toward the jurors instead of the monitor, where a live transcript of the testimony was being displayed. His bottle of Polish mineral water was half full and slightly deformed as he held it and set it down. Bankman-Fried's parents sat nearby, writing careful notes.
She said the accounts were reopened to Alameda after Ellison paid "cryptocurrency transfers" of approximately $100 million to $150 million into the accounts, although she was "not sure who." It later emerged that the accounts were for Chinese officials. Ellison said Bankman-Fried and Trabuco told her via the Signal chat tool to make the payment.
Ellison said employees came up with a number of "strategies" to open the accounts before they were reopened, such as having their lawyers contact exchanges and government officials. She testified that they even considered having Thai prostitutes open accounts on exchanges in hopes of transferring funds to them, but those efforts failed.
An Alameda trader named "Handy" resigned in early January 2022 because she disagreed with the decision to bribe Chinese officials because her father was a Chinese official. Before she completed her transfer, she got into an argument with Bankman-Fried about the matter; during the argument, Bankman-Fried allegedly told her to "shut up," Ellison testified.
On February 2, 2022, about a month after Handy resigned, Trabuco wrote in the Signal chat tool: "Did Handy's father report us immediately?" Bankman-Fried replied: "I laughed to death."
Ellison shared a list with prosecutors in which she wrote down things to consider, including a note that read "The $150 million thing?" referring to the money being transferred back into the account.
When asked under scrutiny why she didn't put it in writing that the $150 million was a payment to China, Ellison said she "didn't want to put it in writing that we paid to unlock the account" because she "thought (it) could get out and be used against (Alameda) in court."
Bankman-Fried's lead attorney, Mark Cohen, attempted to remove Ellison's statement that he did not want the payment to be in writing, but was rebuffed. Cohen tried again, and Kaplan politely responded: "Well, attorney, when I say no, that discussion is over."
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