We have constantly updated you on the biggest scandal ever in crypto history. Since Sam Bankman-Fried has pleaded not guilty, every twist and turn carries weight. According to Caroline Ellison, former CEO of Alameda Research, a tweet by Binance CEO Changpeng Zhao, also known as CZ, played a role in the collapse of the crypto exchange FTX.
So far, the court has analyzed the Binance Balance sheet leak angle. The tweet controversy also enrages crypto fans on Binance’s nasty role in the FTX collapse. Here’s the story.
Day 7: Post-Partum of Controversial Tweet, Ellison’s Testimony Decodes More Facts
This courtroom drama, now in its seventh day, has been marked by Ellison’s pivotal testimony. She was among the first insiders of FTX and Alameda to plead guilty, part of a cooperation agreement with U.S. authorities. Bankman-Fried, on the other hand, maintains his plea of not guilty, facing seven charges in his current trial, with an additional five counts slated for a separate trial in March 2024. This is just the beginning. The star-studded case has deeper connections.
In the now-infamous tweet from Nov. 6, 2022, CZ announced Binance’s intention to liquidate its FTX Token (FTT) holdings due to recent revelations. This move triggered a domino effect, with retail investors following suit and withdrawing their funds from FTX. The push led FTX to halt withdrawals and eventually declare bankruptcy. While Ellison played a victim card on the tweet’s impact, she emphasized that the primary reason for FTX’s collapse was Alameda’s borrowing of $10 billion from the exchange that it couldn’t repay.
CZ Rebuffed All the Claims
During the trial, CZ countered claims that his tweet singlehandedly “destroyed FTX,” asserting that a robust business couldn’t be dismantled by a tweet alone. He pointed to Ellison’s own social media activity on Nov. 6, suggesting that Alameda’s offer to buy Binance’s FTT holdings was the true catalyst for the token sell-off.
While Eliison Opened Some More Twists
Ellison’s testimony delved into several revelations, from Bankman-Fried’s presidential aspirations to his pursuit of Saudi Crown Prince Mohammed bin Salman as a potential backer. Her cross-examination by the defense focused on Bankman-Fried’s knowledge of Alameda’s operations.
When pressed by the defense, Ellison admitted that Bankman-Fried might not have been aware of the risks posed to FTX customers’ funds, a statement deemed “vague” by Assistant U.S. Attorney Danielle Sassoon.
