How Alameda Helped Bankrupt Crypto Lenders

Sam Bankman-Fried’s former lieutenant, Alameda Research CEO Caroline Ellison, this week detailed how Bankman-Fried oversaw a massive fraud by pushing Alameda to use FTX customer funds for startup investments, political donations and loans to executives. But Ellison’s testimony also pulled back the curtain on the once-secret world of crypto lending, which underpinned the rise of FTX and Alameda.

On the witness stand, Ellison described how Alameda duped firms like BlockFi and Genesis, a subsidiary of Barry Silbert’s Digital Currency Group, into lending billions of dollars in cash and crypto to the trading firm, without telling the lenders how much Alameda relied on FTX customer deposits to prop up its balance sheet.