FTX's founder's ex-lover is cooperating — and admits to financial misconduct : report

On Friday, The Daily Beast reported that disgraced FTX crypto exchange tycoon Sam Bankman-Fried's former romantic partner is cooperating with federal authorities — and has freely admitted to some of the financial misconduct that was going on.

"Caroline Ellison, former CEO of Alameda Research — the crypto trading firm founded by her one-time romantic partner Sam Bankman-Fried — admitted to a judge on Monday that she and other execs knowingly lied about financial shenanigans at Alameda and at Bankman-Fried’s crypto exchange FTX," reported Noah Kirsch.

The key accusation by federal investigators and industry experts is that Bankman-Fried was mingling the money people were depositing into the FTX crypto exchange, with the money he was using at Alameda to place high-risk crypto investments of his own, fraudulently wiping out billions of dollars worth of his clients' money while gambling to enrich himself.

“We prepared certain quarterly balance sheets that concealed the extent of Alameda's borrowing and the billions of dollars in loans that Alameda had made to FTX executives and to related parties,” Ellison said, according to court transcripts. She added that she "agreed with Mr. Bankman-Fried and others not to publicly disclose the true nature of the relationship between Alameda and FTX."

In addition to fraudulent use of customer funds, Bankman-Fried is also accused of campaign finance fraud, using the money of his crypto banking clients to make generous contributions to both the Democratic and Republican Parties

"Bankman-Fried faces an eight-count indictment; he remains under home detention at his parents’ California house as part of a $250 million bond agreement," noted the report.