Former Alameda CEO Caroline Ellison recognized she wasn’t doing a good job months before the company filed for bankruptcy, but Sam Bankman-Fried persuaded her to stay.

Caroline Ellison wasn’t doing a good job leading Alameda Research in 2022, and she did not hide it. Excerpts from her personal notes shared as evidence by prosecutors in Sam Bankman-Fried’s trial revealed details about the trading firm’s struggles and its CEO’s desire to resign weeks and months before FTX collapsed.

Ellison spent over 10 hours testifying during Bankman-Fried’s trial this past week, notably entering through the front doors of the United States District Court for the Southern District of New York in Manhattan, joined by her attorneys. Ellison said she had not seen Bankman-Fried since the crypto empire failed in November 2022, but their communication had eroded months before.

In April 2022, their romantic relationship ended, and Caroline started avoiding meetings with Bankman-Fried even though they still lived in the same luxurious apartment in the Bahamas. Alameda’s growing liabilities with FTX and the breakup with Bankman-Fried made her consider leaving the company altogether.

“I feel like neither [Sam] Trabucco nor I have been doing a great job of pushing on stuff,” she wrote in the document to Bankman-Fried, which was shared as evidence during her cross-examination by the former FTX CEO’s defense counsel.

One more Caroline Ellison courtroom sketch.

This one featuring SBF himself! https://t.co/q3O6xqxEhl pic.twitter.com/cQJbj5V1H7

— Ariel Givner, Esq. (@GivnerAriel) October 11, 2023

Bankman-Fried asked her to stay on, saying that her departure could create rumors about Alameda’s financial health, thus harming FTX’s credibility, so Ellison remained CEO.

Ellison joined Alameda as a trader in 2018. By 2020, she handled most of the company’s operations, while Bankman-Fried focused on his newly launched crypto exchange, FTX. In August 2021, she became co-CEO alongside Sam Trabucco, who stepped down a few months later, leaving her in charge of the company. In August 2022, Trabucco officially resigned as co-CEO.

Ellison was against creating FTX, she revealed. “I didn’t think of myself as ambitious before I started at Alameda, but I believe I became more ambitious” under Bankman-Fried’s incentive, she said.

As CEO, Ellison was in charge of handling Alameda’s crypto lenders. In mid-2022, after the Terra ecosystem failed, the company’s open-term loans stood at $1.3 billion. The market downturn drained liquidity from crypto assets, prompting Alameda’s lenders to demand loan repayments.

According to Ellison, Bankman-Fried instructed her to keep repaying creditors via Alameda’s line of credit with FTX. In other words, Alameda would use FTX’s customer assets to repay crypto lenders. At the time, its line of credit with the exchange stood at $13 billion.

As lenders demanded loan repayments and Alameda’s balance sheets, Bankman-Fried suggested Ellison use “alternative means” for presenting the company’s financials. In the following months, Ellison would create many additional versions of a balance sheet to deceive creditors.

Early in November 2022, an alternative version of Alameda’s balance sheet was leaked. Ellison was on vacation in Japan at the time, but she had to travel to FTX Hong Kong’s office to deal with the company’s crisis.

While the balance sheet data didn’t reflect the company’s reality, it was enough to spread rumors and trigger a bank run on FTX a few days later, exposing an $8 billion gap between the companies.

Having cooperated with the U.S. Department of Justice since December 2022, Ellison will soon receive her sentence regarding the seven counts of fraud and conspiracy to commit fraud she was charged with.

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ProShares' SETH ETF will start trading soon, following the first Ethereum futures ETFs by about two weeks.

ProShares introduced a trio of Ethereum futures ETFs in the recent weeks. Presently, the company is gearing up to provide a distinctive offering.

ProShares' Short Ether Strategy ETF (SETH) from the fund group is poised to commence trading shortly, following the debut of the initial Ethereum futures ETFs by about two weeks.

SETH, scheduled for listing on the NYSE Arca exchange, aims to achieve daily investment outcomes that mirror the inverse of the daily S&P CME Ether Futures Index performance, as indicated in a filing made on Friday, Oct. 13.

The fund does not engage in direct shorting of ether (ETH); rather, it seeks to capitalize on potential declines in the asset's value, as stated in the prospectus. On Friday, the price of ETH stood at approximately $1,540, reflecting a decrease of approximately 6% over the past week.

ProShares anticipates that the registration statement for SETH will become effective on Oct. 15 and plans to introduce the fund in early November, as reported by Blockworks.

However, the three existing ProShares ether futures funds — including two that invest in both ether and bitcoin futures contracts — debuted on Oct. 2 alongside similar products by VanEck and Bitwise.

The US Securities and Exchange Commission approved ether futures ETFs two years following the introduction of the initial bitcoin futures ETF, the ProShares Bitcoin Strategy ETF (BITO), which entered the market in Oct. 2021.

Related: SEC reportedly won’t appeal court decision on Grayscale Bitcoin ETF

ProShares continued its release of bitcoin futures ETFs with the Short Bitcoin Strategy ETF (BITI) in June 2022. As of now, BITO has accumulated around $850 million in assets, while BITI has approximately $75 million.

In August, Cointelegraph reported that Ether futures ETFs may be approved in October, causing an 11% spike in ETH prices at the time.

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If true, the SEC will need to review and decide on Grayscale’s spot Bitcoin ETF application. If denied, Grayscale could appeal the decision.

The United States Securities and Exchange Commission reportedly has no plans to appeal the recent court decision that favored Grayscale Investments. The ruling requires the SEC to review the firm’s spot Bitcoin (BTC) exchange-traded fund (ETF) application.

Benzinga (and others) reporting that Reuters is reporting that the SEC will NOT be appealing Grayscale case. pic.twitter.com/yd9BBtRwv5

— Eric Balchunas (@EricBalchunas) October 13, 2023

The SEC’s supposed decision not to appeal the D.C. Circuit Court of Appeal’s ruling was highlighted in an Oct. 13 report from Reuters, which cited “a source familiar with the matter.”

Bloomberg analysts also expect the SEC not to appeal to the Supreme Court but emphasized that this doesn’t necessarily mean Grayscale’s application is set to be approved.

If the reports are true, the SEC will need to follow the court’s August order and review Grayscale’s application to change its Grayscale Bitcoin Trust (GBTC) into a spot Bitcoin ETF.

According to Reuters, the appeals court is expected to issue a mandate specifically outlining how its ruling should be “executed” by the SEC.

Commenting on the developments, Bloomberg ETF analyst James Seyffart noted via X that:

“I do not think they will appeal to the Supreme Court either. Dialogue between Grayscale and SEC should begin next week. Hoping for more info on next steps sometime next week or week after?”

1. Done deal I guess if this is accurate. No en banc application

2. No. I do not think they will appeal to the Supreme Court either.

3. Dialogue between Grayscale and SEC should begin next week. Hoping for more info on next steps sometime next week or week after? https://t.co/2EayzqeKGq

— James Seyffart (@JSeyff) October 13, 2023

Moving forward, Seyffart suggested that it is likely that “we will find out in the next week (or two)” what the deadline is for the SEC to approve or deny Grayscale’s spot BTC ETF application.

If the SEC were to deny the application, Grayscale could then appeal that decision, dragging the process out even longer.

Related: Bitcoin price gets new $25K target as SEC decision day boosts GBTC

As it stands, around seven spot Bitcoin ETF applications have been put before the SEC that are awaiting a decision from the regulator.

In a separate preceding X post on Oct. 13, Seyffart reiterated his view that there is a 90% chance that a spot Bitcoin ETF application will get approved in January 2024, specifically the application from Cathie Wood’s ARK Invest.

I've gotten a lot of questions regarding my current view on Spot #Bitcoin ETFs over the last couple weeks. This is the first section of the note I put out yesterday with @EricBalchunas.

TLDR: Our view hasn't changed much https://t.co/dRAm5IsdQf pic.twitter.com/Htsi3n2XxV

— James Seyffart (@JSeyff) October 13, 2023

Seyffart and Bloomberg’s senior ETF analyst Eric Balchunas, also previously suggested that there is a 75% chance that an application will get approved in 2023.

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