In June 2022, amid the broader crypto meltdown, Caroline Ellison and FTX co-founder Sam Bankman-Fried were looking at a massive hole in Alameda Research’s balance sheet.
FTX’s affiliated hedge fund had borrowed billions of dollars from the cryptocurrency exchange’s deposits. If FTX customers or potential lenders caught wind of it, Ellison, Alameda’s chief executive officer, feared it would “all come crashing down.” But Bankman-Fried had a solution: create new balance sheets. Ellison came up with seven.
