The former head of the hedge fund revealed to the judge that Sam Bankman-Fried and other FTX executives received billions of dollars in covert loans from the crypto tycoon’s Alameda Research when she admitted to her role in the collapse of the exchange.

According to a transcript of her Dec. 19 plea hearing that was unsealed on Friday, Caroline Ellison, the former CEO of Alameda Research, claimed she and Bankman-Fried agreed to conceal from FTX’s investors, lenders, and customers that the hedge fund could borrow an unlimited amount from the exchange.

“We prepared certain quarterly balance sheets that concealed the extent of Alameda’s borrowing and the billions of dollars in loans that Alameda had made to FTX executives and to related parties,” Ellison told U.S. District Judge Ronnie Abrams in Manhattan federal court, according to the transcript.

Ellison and FTX co-founder Gary Wang both entered guilty pleas; as part of their plea deals, they are cooperating with prosecutors. Their sworn statements provide a sneak peek into how two of Bankman-former Fried’s associates might testify as prosecution witnesses against him in court.

In a separate plea hearing, which took place on December 19, Wang claimed that he was instructed to modify the FTX code so as to grant Alameda special access to the trading platform, despite being aware that others were informing customers and investors that Alameda did not have such access.

Wang made no mention of the source of those instructions.

The prosecution’s case against Bankman-Fried will feature testimony from “multiple cooperating witnesses,” prosecutor Nicolas Roos stated in court on Thursday.

According to Roos, Bankman-Fried committed a “fraud of epic proportions” that cost billions of dollars in investor and customer funds.

Although Bankman-Fried admitted that FTX had poor risk management, he insisted that he did not think he was criminally responsible. He hasn’t yet admitted guilt.

Bankman-Fried established FTX in 2019 and profited from a surge in the value of bitcoin and other digital assets to become a multi-billionaire and a significant contributor to American political campaigns.

FTX filed for bankruptcy on November 11 as a result of a flurry of customer withdrawals in early November amid worries about the mixing of FTX funds with Alameda.

Bankman-Fried, 30, was freed on a $250 million bond on Thursday. His representative declined to respond to the remarks made by Ellison and Wang.

Wang and Ellison’s attorneys declined to comment.

Ellison testified in court that she and others agreed to borrow billions of dollars in FTX customer funds to repay investors when they called back loans they had made to Alameda in June 2022, knowing that customers were unaware of the arrangement.

“I am truly sorry for what I did,” Ellison said, adding that she is helping to recover customer assets.

Wang added that he was aware of the error of his ways.

In the beginning, the transcript of Ellison’s hearing was kept confidential out of fear that the authorities’ attempts to extradite Bankman-Fried from the Bahamas, where he resided and where FTX was based, could be thwarted by the revelation of her cooperation, according to court documents.

Bankman-Fried was detained in Nassau’s capital on December 12 and, after agreeing to be extradited, arrived in the US on Wednesday.

He was mandated to remain in his California parents’ house until his trial by a magistrate judge.

As stated in a court order, Abrams withdrew herself from the case on Friday night. Her husband is a partner at the law firm Davis Polk & Wardwell LLP, which advised FTX in 2021.

The judge stated that even though her husband had no involvement in these matters, which “were confidential and their substance is unknown to the Court,” she was recusing herself in order to avoid a potential conflict. The firm also represented parties that could be adverse to FTX and Bankman-Fried in other proceedings.

(Adapted from NBCNews.com)