Caroline Ellison Testifies That Alameda Used Billions of FTX Customer Funds

Caroline Ellison testified that billions in FTX customer funds were diverted to Alameda Research for investments and to repay lenders, raising scrutiny of SBF.

Caroline Ellison’s courtroom testimony has become a pivotal moment in the ongoing FTX trial. Ellison — described in testimony as Sam Bankman‑Fried’s on‑again, off‑again girlfriend and one of his most trusted deputies — told jurors that Alameda Research used billions of dollars in FTX customer funds for investments and to pay off lenders.

The claim strikes at the heart of the FTX collapse and the larger crypto scandal that followed. According to Ellison, money customers believed was held on the FTX crypto exchange was instead redirected to Alameda Research, the sister trading firm closely tied to FTX. That diversion of customer funds for Alameda’s investments and to satisfy lender obligations is central to prosecutors’ narrative of alleged fraud and misuse of customer assets.

Ellison’s testimony underscores several critical issues: corporate governance failures, lack of separation between FTX and Alameda, and inadequate safeguards for customer funds. For a market still recovering from high-profile collapses, allegations that billions were moved without proper authorization have intensified calls for stronger regulation, clearer custody rules, and tighter oversight of crypto exchanges.

For Sam Bankman‑Fried and other defendants, the testimony could be damaging. Ellison was a key insider whose account helps prosecutors explain how decisions were made and why customer funds were accessible to Alameda. Defense teams have challenged aspects of the testimony, framing it as self-serving or incomplete, but the details Ellison provided — including specific transfers and repayment actions — have drawn significant media and legal attention.

Beyond the courtroom, the fallout affects the broader crypto industry. Investors and retail customers are demanding greater transparency about where funds are held and how they are protected. Regulators worldwide are seizing on the trial as justification for more stringent rules to prevent a repeat of the alleged misuse of customer funds.

As the trial continues, Ellison’s statements will remain a focal point for anyone following the FTX case, from legal observers to crypto investors. Whether her testimony leads to convictions or prompts policy change, it has already reshaped the conversation about responsibility, trust, and accountability in the fast‑evolving world of cryptocurrency.

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