Caroline Ellison paid herself $22.5 million bonus around the time she estimated a more than $10 billion cash shortfall at FTX, lawsuit alleges

Towards the conclusion of the previous year, the cryptocurrency exchange FTX experienced a significant downfall, resulting in Alameda Research, its affiliated trading company, encountering a similar outcome.

In order to mitigate its financial losses, FTX was alleged to have covertly redirected its customers’ funds to its affiliated company, while Alameda itself incurred substantial losses due to risky wagers.

In the legal proceedings initiated following FTX’s collapse, founder and CEO Sam Bankman-Fried (commonly referred to as “SBF”) and its top executives have been accused of gross mismanagement.

In December, Ellison herself admitted to seven crimes, which included wire fraud and the illegal transfer of funds.

Shortly after, SBF and she reported that they were aware of the red flags at the crypto exchange three months before it collapsed, and FTX went under.

According to a recent legal document, instead of taking action to address the issue, Ellison was aware of significant deficiencies in FTX’s financial situation eight months prior to the public revelation of the firm’s cashflow difficulties and resorted to a complex set of transactions in order to award herself a multimillion-dollar bonus.

FTX’s most recent lawsuit against SBF and his top associates, filed on Thursday, claims that as early as March 2022, Ellison estimated a cash deficit of over $10 billion for FTX.

Using alternate accounts, a sequence of transactions moved $22.5 million from Alameda to her personal FTX account shortly after she recorded the approximate amount in her personal notes.

On March 29th, she allegedly transferred a sum of $10 million, referred to as a “bonus,” from the funds invested in an unnamed artificial intelligence company’s research and safety, to her personal bank account.

In the legal case, the funds were classified as “improperly used debtor funds.”

When Fortune tried to contact Ellison’s lawyers, they were unavailable for comment.

It was also alleged that Ellison had misused funds from the company on separate occasions between 2021 and 2022, giving herself other multimillion-dollar bonuses.

“No ‘reward’ could possibly be justified given Ellison’s extensive wrongdoing,” the complaint filed on Thursday stated.

After receiving a significant bonus payment, Ellison, FTX initiated voluntary Chapter 11 proceedings in the United States eight months later.

After filing for bankruptcy, the company’s finances failed to raise emergency funds and publicly scrambled to plug the gaps, following former boyfriend Ellison’s SBF.

Bankman-Fried, widely respected for his image as both a business magnate and philanthropist, saw his reputation at FTX left in ruins following the 48-hour demise. Drawing comparisons to Warren Buffett, he had carefully cultivated an image of being a successful business magnate and a generous philanthropist until the downfall of his company.

SBF, as reported by Bloomberg, experienced a massive personal financial setback as the firm’s collapse wiped out his entire fortune of $16 billion, making it one of the most significant destructions in history.

At the height of his wealth, the 31-year-old possessed a total value of $26 billion.

Ellison discovered the position of CEO to be ‘challenging’

Under the leadership of Ellison, Alameda experienced significant growth in wealth throughout her time in charge. FTX and Alameda suffered a major collapse when Ellison was only 28 years old.

FTX reported that the cryptocurrency exchange collapsed, causing the company to have a net worth of $15 million. Additionally, she received $6 million in loans and payments over the course of the exchange’s existence, leading to her filing for bankruptcy.

However, it was revealed on Thursday that Ellison had little confidence in her own capability to manage the company.

“I feel like I don’t fit in well or benefit from the circumstances in Alameda Running,” she stated in a journal entry observed by the New York Times.

She stated, “I have been experiencing considerable dissatisfaction and immense stress with my job. When the workday concludes, I eagerly anticipate returning to my residence, disconnecting from my phone, indulging in a beverage, and escaping from all my responsibilities.”

During a hearing in December, Ellison informed the judge that she “was aware that [her actions] were incorrect.”

When asked if she was aware that her actions were against the law, Ellison responded, “Yes.”

Before entering her guilty plea and agreeing to cooperate with authorities, Ellison was reportedly facing a 110-year prison sentence for her crimes.

Legal proceedings are still in progress.