Ellison on Tuesday supported prosecutors’ allegations that Bankman-Fried orchestrated a scheme to plunder FTX customer money to cover Alameda debts that funded risky investments and luxury real estate purchases. Bankman-Fried “was the one who directed us to take customer money to repay our loans,” she said, adding the loans were “in the ballpark of $10 billion.”

Ellison said that Bankman-Fried also wanted to use the money to influence politics. “He thought there was a 5 percent chance he’d become president,” Ellison said.

Her testimony follows that of two other Bankman-Fried confidants and top lieutenants who told jurors last week that the executive orchestrated an enormous fraud on customers of FTX. Adam Yedidia, a college friend of Bankman-Fried’s who joined FTX as a software developer, said he resigned after he caught wind of the conduct as the company unraveled. And Gary Wang, who, like Ellison, has pleaded guilty to committing financial crimes as FTX’s chief technology officer, testified that Bankman-Fried stole $8 billion from customers and publicly lied about it.

Ellison pleaded guilty in December to seven counts, including wire fraud and securities fraud, and agreed to cooperate with prosecutors in expectation of receiving a lighter sentence. She said she participated in the scheme that is central to prosecutors’ case, defrauding FTX customers by using their funds to repay debts owed by Alameda Research.

Prosecutors on Tuesday focused Ellison’s questioning on Alameda’s balance sheet in the year leading up to the FTX’s insolvency. Images of the fund’s financial statements were shown repeatedly to the courtroom, focusing on assets Ellison referred to as “Sam Coins” — cryptocurrencies that “Sam created or had a large influence over,” she said.

Alameda also sent balance sheets to lenders that incorrectly stated the firm’s assets and liabilities, Ellison said.

The trove of Sam Coins was largely illiquid, but that didn’t stop Alameda from taking out billions of dollars of loans against it, Ellison said. When crypto markets went south in the summer of 2022 and lenders asked for some of the loans to be returned, Alameda, under the direction of Bankman-Fried, used customer funds to cover the losses, Ellison said.

Bankman-Fried could face decades in prison if convicted. He has pleaded not guilty.

Prosecutors argue that Ellison was instrumental in Bankman-Fried’s alleged crimes. Nathan Rehn, the assistant U.S. attorney who delivered the government’s opening statement last week, said Bankman-Fried installed Ellison as a “front” atop Alameda while he continued to call the shots behind the scenes.

Defense lawyers for Bankman-Fried presented a different version of events. They cast Ellison as partly responsible for the crypto firms’ implosion by failing to heed a warning from Bankman-Fried to position Alameda for a potential downturn in the price of crypto assets. During their cross-examination of Wang on Tuesday morning, they showed an internal memo in which Bankman-Fried wrote that Alameda’s leadership was “not good enough for such a big operation” and advocated shutting the firm down entirely.

But prosecutors worked to refute this idea in their questioning of Ellison, showing memos she had sent to Bankman-Fried where she warned against the risks of spending more money on venture investments. In 2021, Ellison estimated that a new venture fund would put Alameda’s chances of not being able to pay off its loans in a market crash at 30 percent. Bankman-Fried started FTX Ventures anyway, setting aside $2 billion for it.

As a witness, Ellison — a Stanford-educated mathematician — brings a mix of personal and professional insight into Bankman-Fried’s conduct, former federal prosecutor Adam Kamenstein said.

“She’s going to establish that not only did Sam operationally know what was going on but that he was lying about it,” Kamenstein said. “It’s going to be game over.”

Bankman-Fried and Ellison met when they both worked at Jane Street Capital, a proprietary investment firm in New York City. Bankman-Fried quit in 2017 to found Alameda, recruiting Ellison to join him the following year. He promoted her to co-chief executive of the firm in 2021, and later, sole CEO, while he continued to own a majority of the fund.

Ellison said in her testimony that the largest bonus she received as CEO of Alameda was $20 million, but despite her requests, she was never given equity in the firm.

But Ellison had deep misgivings about her abilities as a leader — anxiety that was compounded by her on-again, off-again romantic relationship with Bankman-Fried, according to private writings that Bankman-Fried later leaked to the New York Times. That leak led Judge Lewis A. Kaplan to revoke the bail that had allowed Bankman-Fried to live under house arrest in his parents’ home in Palo Alto, Calif. He has been held since in a Brooklyn jail.

In her plea appearance in December, Ellison said she had known since 2019 that Alameda had “backdoor” access to FTX customer funds, effectively giving the firm an “unlimited line of credit without being required to post collateral.”

She also discussed Alameda’s numerous large and risky bets in venture deals as well as personal loans to FTX executives, saying those were financed with loans from external lenders “worth several billion dollars.” When those creditors recalled their money, Bankman-Fried and his team tapped FTX customer funds to pay them back, she said.

Ellison said she worked with Bankman-Fried and others to lie to Alameda’s lenders about its soundness, including by doctoring some financial statements. And at Bankman-Fried’s direction, she worked secretly to inflate the market price of FTT — a cryptocurrency issued by FTX and used by Alameda to prop up its balance sheet — to improve the appearance of the firm’s financial health to those lenders, prosecutors say.

Throughout her time there, Ellison kept detailed records of the state of the business and the efforts of Bankman-Fried and his closest advisers to manage as the enterprise began deteriorating amid a wider crypto industry downturn in 2022.

She “took notes at meetings with her co-conspirators at which they discussed, among other things, the financial health of Alameda and its liabilities to FTX,” prosecutors wrote in an August court filing outlining the evidence they plan to use at the trial. Her records included a list titled “Things Sam is Freaking Out About,” which named Alameda’s trading positions, bad press about the entanglement between FTX and Alameda, and fundraising, according to the filing.

Ellison also is likely to provide a window into the swift collapse of the business in early November. As FTX faced a solvency crisis, with a cascade of customers trying to pull their deposits and the rival exchange Binance exploring a short-lived bid for the company, Ellison gathered Alameda employees to offer a tearful explanation, according to a recording of the meeting obtained by prosecutors.

Alameda “ended up borrowing a bunch of funds on FTX” to repay its creditors, she said. “I guess, mostly I wanna say, like, I’m sorry. This really sucks.”

Asked by an employee who had made the call to take FTX customer money, she said, “Um … Sam, I guess.”

Newmyer reported from D.C.