Star witness in Sam Bankman-Fried trial offers insider account of alleged criminal enterprise

After more than nine hours of testimony over two days, Caroline Ellison, the most important witness in the government's case against Sam Bankman-Fried, broke down as she described the final days of the crypto empire she helped build.

Strangely, she said, even though it was "overall the worst week of my life," she told Bankman-Fried in the moment that it was also "the best mood I've been in in a year." Through tears, she told jurors she had an "overwhelming feeling of relief" because the moment she'd been dreading had finally come. She didn't have to lie any more, she said, though she still felt "indescribably bad" about the people "we betrayed."

The moment she'd been dreading was the rapid financial implosion in November of Alameda Research, the crypto hedge fund for which she was chief executive, and FTX, its sister trading platform run by Bankman-Fried, 31, who she says directed her and others to mislead the public and investors about the true nature of the relationship between the two companies.

Earlier in the day, Ellison described how she distributed "dishonest" balance sheets to lenders that concealed billions of dollars in funds that had been siphoned from FTX customer accounts.

Before FTX collapsed, it owed its clients $12 billion, but the company - counter to Bankman-Fried's assurances on Twitter - had only $4 billion in client holdings, Ellison said. The missing $8 billion had been siphoned by Alameda to cover its debts and issue loans to Bankman-Fried and others, according to prosecutors.

Bankman-Fried has pleaded not guilty to seven counts of fraud and conspiracy. His defense briefly began to cross-examine Ellison on Wednesday before Judge Lewis Kaplan declared, "it's been a long day," and suggested the court adjourn a half hour early. Defense lawyers will continue cross-examining Ellison on Thursday.

Ellison, who dated Bankman-Fried off and on over two years while working at Alameda, pleaded guilty to seven counts of fraud and conspiracy as part of a cooperation deal with prosecutors.