Ellison and FTX co-founder Gary Wang, who appeared in a Dec. 19 hearing, pleaded guilty to fraud charges and are cooperating with prosecutors.

“I was aware that Alameda had access to a borrowing facility on FTX.com, the cryptocurrency exchange run by Mr. Bankman-Fried, from 2019 to 2022,” Ellison said, “In practical terms, this arrangement provided Alameda with access to an unlimited line of credit without posting collateral, without having negative balances, or being subject to margin calls under the liquidation protocols of FTX.com.”

According to Ellison, “I understood that if Alameda’s FTX accounts had significant negative balances in any particular currency, Alameda was borrowing funds that FTX’s customers had deposited.”

To conceal Alameda’s borrowing amount, she and Bankman-Fried crafted false financial statements.

Wang testified in his plea hearing that he was “directed” to change FTX’s code to give Alameda special privileges, and that investors and customers were misled.

Wang replied, “I know what I was doing was wrong.”.

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