Caroline Ellison, the former CEO of Alameda Research LLC, appeared in court in New York on October 12, 2023, as the government’s key witness in the fraud case against Sam Bankman-Fried, the founder of FTX. The trial took place in a courthouse in downtown Manhattan.
During a relatively slow day in court, one of the more dramatic moments occurred during a side conference between the attorneys and Judge Lewis Kaplan. The prosecutor claimed that Bankman-Fried’s behavior may be affecting Ellison, who was both CEO of Alameda Research and romantically involved with Bankman-Fried.
Ellison pleaded guilty to multiple charges in December and has been cooperating with the prosecution in their case against Bankman-Fried. On Thursday morning, she faced aggressive questioning from Bankman-Fried’s lawyer, Mark Cohen. However, Judge Kaplan appeared annoyed at Cohen’s repeated interruptions and requests for sidebars.
During her testimony, Ellison avoided eye contact with Bankman-Fried, frequently flipping her hair and looking down at her hands. Cohen questioned Ellison about her former co-CEO, Sam Trabucco, and their role in Alameda’s operations. Ellison testified that Bankman-Fried had largely stopped coming into the office by 2021 and had left the job to her and Trabucco.
She also revealed that she had used FTX customer funds to pay off Alameda’s loans, allegedly at Bankman-Fried’s suggestion. Additionally, she mentioned that Bankman-Fried had considered adding a new co-CEO after Trabucco’s departure, but she resisted.
The questioning became slow and disjointed, and Judge Kaplan and some jurors appeared bored. Ellison testified that she had considered resigning from Alameda at various points and had identified management as one of the company’s limiting factors.
Ellison also discussed the lack of separation between FTX and Alameda’s operations and the effect of her breakup with Bankman-Fried on their communication. She mentioned that the FBI had searched her home and confiscated her boyfriend’s laptop after FTX declared bankruptcy. Following the raid, Ellison met with prosecutors around 20 times.
Prosecutor Danielle Sassoon raised concerns about Bankman-Fried’s behavior in court, claiming that it could be affecting Ellison given their history and power dynamic. Cohen dismissed these claims as ridiculous, stating that any reactions from Bankman-Fried were up to the judge and jury to determine.
Cohen wrapped up his cross-examination just before 2:30 p.m., and the prosecution followed up with their own questions. Ellison revealed that she felt trapped in the summer of 2022 and feared that revealing FTX and Alameda’s financial condition would lead to a bank run and the collapse of both companies.
She considered retiring but was convinced by Bankman-Fried to stay, as he believed she was too important to leave. The trial continued with further testimony and questioning.
Watch the ongoing trial of Sam Bankman-Fried for more details.
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