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Caroline Ellison, former chief executive officer of Alameda Research LLC, exits court in New York, US, on Tuesday, Oct. 10, 2023. 

Yuki Iwamura | Bloomberg | Getty Images

Caroline Ellison, who ran Sam Bankman-Fried’s crypto hedge fund while also dating the FTX founder, told jurors in her second day of testimony that one way her boss was considering repaying FTX customer accounts was by raising money from Saudi Crown Prince Mohammed bin Salman.

Ellison, 28, pleaded guilty in December to multiple counts of fraud as part of a plea deal with the government and is now viewed as the prosecution’s star witness in Bankman-Fried’s trial. In damning testimony on Tuesday, she said Bankman-Fried directed her and other staffers to defraud FTX customers by funneling billions of dollars to sister hedge fund Alameda Research.

Assistant U.S. attorney Danielle Sassoon wasted no time diving back into the questioning when court was called to session at 9:30am.

After previously detailing how FTX customer funds were used to repay Alameda loans, Ellison said on Wednesday that crypto lender Genesis called back a bunch of loans in 2022 and asked to see a balance sheet. Because Alameda’s actual balance sheet showed it had $15 billion in FTX customer funds, Bankman-Fried directed Ellison on June 28, 2022, to come up with “alternative” balance sheets that didn’t look as bad, she said.

Ellison, wearing a buttoned gray blazer with her long hair swept over her left shoulder, said she discussed her concerns with Bankman-Fried as well as top execs Gary Wang and Nishad Singh. She said the group brainstormed ways to make the balance sheet look better.

Assistant U.S. Attorney Danielle Sassoon questions Caroline Ellison as defense lawyer Mark Cohen stands to object at Sam Bankman-Fried’s fraud trial before U.S. District Judge Lewis Kaplan over the collapse of FTX, the bankrupt cryptocurrency exchange, at Federal Court in New York City, U.S., October 11, 2023 in this courtroom sketch. 

Jane Rosenberg | Reuters

After the meeting, Ellison prepared a number of different balance sheet variations to send to Genesis. Eventually, according to Ellison, Bankman-Fried chose the one that omitted a line saying “FTX borrows,” hiding $10 billion in borrowed customer money. “Some was netted against related-party loans,” she said, and “some netted against crypto.”

That made it seem “like we had plenty of assets to cover our open term loans,” Ellison said.

Ellison told jurors she “was in a constant state of dread” since she knew there were billions of dollars of loans being recalled that could only be repaid with money from FTX customers. She said she was “worried about the possibility of customer withdrawals” that could happen at any time.

“I was concerned that if anyone found out, it would all come crashing down,” Ellison said. When asked by Sassoon why she continued with the scheme, Ellison said, “Sam told me to.”

By October 2022, the internal balance sheet had liabilities of $15.6 billion, while the numbers they showed the lender indicated just under $8 billion. Ellison said Bankman-Fried was talking about trying to raise money from Mohammed bin Salman, also known as MBS, as a way to make FTX customers whole.

Disappearing Signal messages

Ellison, a Stanford graduate and one of Bankman-Fried’s earliest recruits to Alameda in 2017, was reportedly convinced by Bankman-Fried to ditch her job at Wall Street trading firm Jane Street to join Alameda as a trader. At the time, the hedge fund was still in its original office in the San Francisco Bay area.

Six years later, Ellison is testifying against the 31-year-old Bankman-Fried, who faces seven federal charges, including wire fraud, securities fraud and money laundering, all tied to the collapse of FTX and Alameda late last year. If convicted in the trial that began last week, Bankman-Fried could spend his life in prison. He has pleaded not guilty.

Ellison said Bankman-Fried directed FTX and Alameda employees to use the disappearing message setting on Signal and told them to be very careful about what they put in writing because of potential legal exposure. In addition to a companywide meeting about the Signal policy, Bankman-Fried also told employees that when it comes to Slack, they should only write things that they’re comfortable seeing on the front page of the New York Times.

Caroline Ellison, former CEO of Alameda Research, center, arrives at court in New York on Oct. 10, 2023.

Yuki Iwamura | Bloomberg | Getty Images

Backing up to the summer and fall of 2022, Ellison provided more detail about her interactions with Bankman-Fried as his crypto firms’ financial problems were becoming more apparent. Ellison said the two ways they talked about bringing in more money for FTX were by acquiring BlockFi or by selling equity.

In August of last year, Ellison said Bankman-Fried told her that Alameda’s finances were her fault even though she’d been warning about FTX’s expanding portfolio of venture investments and the need to repay FTX customer accounts. Bankman-Fried told her she should have hedged and, “speaking loudly and strongly,” said it was “her fault.”

On the stand, Ellison took some blame, admitting she should have done things differently, “but Sam was the one who chose to make all the investments that put us in a leveraged position,” she said.

Ellison, who’d started dating Bankman-Fried in the summer of 2021, said that by the fall of 2022 they’d been broken up for several months. She said she would try to avoid one-on-one contact with Bankman-Fried, though they were still talking on Signal and were together in group meetings. She said she still provided him the same regular updates on Alameda and its balance sheet.

Ellison said she kept a Google Doc that had a subcategory labeled, “things Sam is freaking out about.” It included, “raising from MBS,” as well as “getting regulators to crack down on Binance,” a rival exchange that was also an early investor in FTX. Bankman-Fried wanted to see Binance feel some pain because he saw that as the best way for FTX to increase market share, Ellison said.

Another worry on the list was, “bad pr in the next six months,” which Bankman-Fried feared would interfere with FTX’s efforts to obtain a license for futures trading in the U.S.

WATCH: Ellison says “Sam directed me to commit these crimes”

Star witness in SBF trial: "Sam directed me to commit these crimes"

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Elon Musk ratchets up attacks on Navarro as Tesla shares slump for fourth day

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Elon Musk ratchets up attacks on Navarro as Tesla shares slump for fourth day

Elon Musk (L), and Peter Navarro (R).

Reuters

As Tesla shares plummeted for a fourth straight day, CEO Elon Musk let loose on President Donald Trump’s top trade advisor Peter Navarro.

Musk, the world’s richest person, started going after Navarro over the weekend, posting on X that a “PhD in econ from Harvard is a bad thing, not a good thing,” a reference to Navarro’s degree. Whatever subtlety remained at the beginning of the week has since vanished.

On Tuesday, Musk wrote that “Navarro is truly a moron,” noting that his comments about Tesla being a “car assembler,” as much are “demonstrably false.” Musk called Navarro “dumber than a sack of bricks,” before later apologizing to bricks. Musk also called Navarro “dangerously dumb.”

Musk’s attacks on Navarro represent the most public spat between members of President Trump’s inner circle since the term began in January, and show that the steep tariffs announced last week on more than 180 countries and territories don’t have universal approval in the administration.

When asked about the feud in a briefing on Tuesday, White House press secretary Karoline Leavitt said, “Look, these are obviously two individuals who have very different views on trade and on tariffs.”

“Boys will be boys, and we will let their public sparring continue,” she said.

For Musk, whose younger brother Kimbal — a restaurant owner, entrepreneur and Tesla board member — has joined in on the action, the name-calling appears to be tied to business conditions.

Tesla’s stock is down 22% in the past four trading sessions and 45% for the year. Tesla has lost more tha $585 billion in value since the calendar turned, equaling tens of billions of dollars in paper losses for Musk, who is also CEO of SpaceX and the owner of xAI and social network X.

Even before President Trump detailed his plan for widespread tariffs, he’d already placed a 25% tariff on vehicles not assembled in the U.S. Many analysts said Tesla could withstand those tariffs better than competitors because its vehicles sold in the U.S. are assembled domestically.

But the company’s production costs are poised to increase because of the tariffs on materials and parts from foreign suppliers. Canada and Mexico are among the leading sources of U.S. steel imports, and Canada is the nation’s largest supplier of aluminum, while China and Mexico are home to major suppliers of printed circuit boards to the automotive industry.

At a recent an event hosted by right-wing Italian Deputy Prime Minister Matteo Salvini, Musk said, “Both Europe and the United States should move, ideally, in my view, to a zero-tariff situation, effectively creating a free trade zone between Europe and North America.”

Musk, whose view on trade relations with Europe stands in stark contrast to the policies implemented by the president, has a vested interest in the region. Tesla has a large car factory outside of Berlin, and the European Commission previously turned to SpaceX for launches.

Even before the tariffs, Tesla’s business was faltering. Last week, the company reported a 13% year-over-year decline in first-quarter deliveries, missing analysts’ estimates. That report that landed days after Tesla’s stock price wrapped up its worst quarter since 2022.

Musk, who spent roughly $290 billion to help return Trump to the White House, is now leading the Department of Government Efficiency, or DOGE, which has slashed costs, eliminated regulations and cut tens of thousands of federal jobs. In the first quarter, Tesla was hit with waves of protests, boycotts and some criminal activity that targeted vehicles and facilities in response to Musk’s political rhetoric and his work in the White House.

WATCH: Brad Gerstner explains his Tesla position

Brad Gerstner explains his Tesla position

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Apple’s 4-day slide puts Microsoft back on top as most valuable company

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Apple's 4-day slide puts Microsoft back on top as most valuable company

Satya Nadella, CEO of Microsoft, laughs as he attends a session at the World Economic Forum in Davos, Switzerland, on Jan. 23, 2020.

Denis Balibouse | Reuters

Apple‘s 23% plunge over the past four trading sessions has again turned Microsoft into the world’s most valuable public company.

As of Tuesday’s close, Microsoft is worth $2.64 trillion, while Apple’s market cap stands at $2.59 trillion.

While the market broadly is getting hammered by President Donald Trump’s sweeping tariff plan, Apple is getting hit the hardest among tech’s megacap companies due to the iPhone maker’s reliance on China.

The Nasdaq is down 13% over the past four trading days, as President Trump’s decision to impose tariffs on imports from more than 100 countries has sparked fears of a recession brought on by rising prices. UBS analysts on Monday predicted that the price of the iPhone 16 Pro Max could jump as much as $350 in the U.S.

Both Apple and Microsoft, along with chipmaker Nvidia, were previously valued at upward of $3 trillion before the recent sell-off.

In January, Microsoft issued disappointing revenue guidance. Nevertheless, last week, as Jefferies analysts reduced their price targets on many software stocks, they wrote Microsoft was among the “companies who we view as more insulated” from tariff uncertainty.

Microsoft also had the highest market capitalization of any public company in early 2024, but Apple soon reclaimed the title.

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Tech stocks struggle with intraday gains amid tariff uncertainty

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Tech, semiconductor stocks bounce on tariff optimism, Nvidia jumps 7%

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Tech, semiconductor stocks bounce on tariff optimism, Nvidia jumps 7%

Technology stocks bounced Tuesday after three rocky trading sessions, spurred by rising optimism that President Donald Trump could potentially negotiate tariff deals with world leaders.

Nvidia led the Magnificent Seven group’s gains, rallying about 7%. Meta Platforms, Amazon, Tesla, Apple and Microsoft jumped at least 4% each. Alphabet rose about 3%.

The sector is coming off a wild trading session after speculation that the White House could potentially delay tariffs fueled volatile swings. Alphabet, Meta Platforms, Amazon and Nvidia finished higher, while Apple, Microsoft and Tesla posted losses.

Trump’s wide-sweeping tariff plans have sparked violent turbulence over the last three trading sessions. Trading volume on Monday hit its highest in nearly two decades. Technology stocks gyrated after the Nasdaq Composite posted its worst week in five years and the Magnificent Seven group lost $1.8 trillion in market value over two trading sessions.

Semiconductor stocks also rebounded Tuesday, with the VanEck Semiconductor ETF jumping more than 5% to build on a more than 2% gain from the previous session. Advanced Micro Devices, Lam Research and Micron Technology jumped about 6%.

Chipmakers were excluded from the recent tariffs, but have come under pressure on worries that higher duties could diminish demand for products they are used in and slow the economy. The sector is also expected to see tariffs further down the road.

Elsewhere, Broadcom surged 9% after announcing a $10 billion share buyback plan through the end of the year. Marvell Technology also bounced more than 9% after agreeing to sell its auto ethernet business for $2.5 billion in cash to Infineon Technologies.

WATCH: Tariff volatility erases majority of AI stock gains

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