Alameda CEO Caroline Ellison confessed that she and former FTX CEO Sam Bankman-Fried provided misleading financial statements to Alameda’s lenders.

A Dec. 19 courtroom transcript, unsealed after Bankman-Fried was released on bond, contains statements made by Ellison that will no doubt bear damaging consequences for the FTX founder’s legal case.

Parts of the transcript were made public by Matthew Russell Lee of Inner City Press on Friday.

In her guilty plea, Ellison said that, starting back in 2019, the year FTX was launched, Alameda’s account on FTX was granted an unlimited line of credit without being required to post collateral, pay interest on negative balances or being subject to margin calls.

“While I was co-CEO and then CEO, I understood that Alameda had made numerous large illiquid venture investments and had lent money to Mr. Bankman-Fried and other FTX executives,” said Ellison.

She also said she was aware that FTX would need to use customer funds to finance its loans to Alameda. Between July and October, she said she agreed with Bankman-Fried and others to provide materially misleading financial statements to Alameda’s lenders. Under this agreement, the executives prepared quarterly balance sheets designed to conceal the extent of Alameda’s borrowings and the billions of dollars of loans made to FTX executives, she said.

“I agreed with Mr. Bankman-Fried and others not to publicly disclose the true nature of the relationship between Alameda and FTX, including Alameda’s credit arrangement,” stated Ellison.

“I am truly sorry for what I did. I knew that it was wrong. And I want to apologize for my actions to the affected customers of FTX, lenders to Alameda and investors in FTX,” she added.

Ellison also conceded to being aware that her actions in this regard were illegal.

Her cooperation with prosecutors would likely impair any attempt by Bankman-Fried’s lawyers to argue that the former FTX CEO was unaware of what went on behind the scenes. In the several media appearances that Bankman-Fried made prior to his arrest, he repeatedly claimed that he “didn’t knowingly commingle” FTX’s user funds.