As the trial of Sam Bankman-Fried (SBF) progresses, Caroline Ellison was grilled on Modulo, the FTX-backed Alameda competitor By Godfrey Benjamin 4 hours ago Updated 4 hours ago
According to another live update by Wired, the rivalry between defunct Alameda Research and fellow FTX-backed trading firm Modulo has come up in Caroline Ellison’s Testimony.
Caroline Ellison Faces Cross-Examination
On the seventh day of Sam Bankman-Fried’s trial, his former business associate and ex-girlfriend Caroline Ellison stood on the witness stand again to testify against the 31-year-old entrepreneur. During her cross-examination, defense attorney Mark Cohen questioned her about the rivalry between Alameda Research and popular crypto hedge fund Modulo which was also backed by FTX Derivatives Exchange.
Some of the questions he posed to her were whether or not Modulo is similar to Alameda Research, whether Ellison sees Modulo as a competitor, and whether she considers Modulo as a form of personal competition. While asking these questions, Cohen tried to indirectly mention Lily Zhang, a co-founder at Modulo and a former trader who equally had a love affair with the estranged founder of FTX.
The former Alameda Research Chief Executive Officer confirmed that she often felt like crushing Modulo especially when various memos written to Nishad Singh and Gary Wang showed that SBF favored Modulo over Alameda.
It was uncovered that SBF considered Modulo as a firm with better leadership than Alameda Research. He believed that Ellison was not a natural leader and may never be one when compared to Modulo’s leadership at the time.
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Modulo was once backed by Alameda
Before this silent war between Modulo and Alameda, the latter had been a discrete major contributor to the Modulo trading firm. Just before FTX imploded last year, Modulo received $475 million in seed capital from Alameda Research.
In November, however, a leaked spreadsheet of Alameda exposed the transaction between both firms.
With the new leadership of FTX focused on retrieving all contributions and donations made by SBF as part of the exchange’s bankruptcy proceedings, Modulo was approached to return the fund. In the long run, Modulo agreed to pay $404 million in cash and give up its claim to $56 million in assets held on FTX’s crypto exchange.
So far, Ellison’s testimony has revealed many key events that led up to the collapse of FTX. In addition, she claimed that Bankman-Fried tried to raise funds by selling FTX equity to Saudi Arabia’s Crown Prince Mohammed bin Salman. Some of his other lofty plans were to buy Snapchat and turn regulators against leading cryptocurrency exchange Binance.
The essence of the Modulo link might be to discount some of the strong allegations that Ellison has made in the course of her 3 day of sharing testimony.