Caroline Ellison stood in the security line outside the courthouse, her face hidden by sunglasses and a baseball cap. As the cameras flashed, she remained tense. But upon entering the 26th floor half an hour later, she presented herself to the jury with a sense of openness, as if she had nothing left to hide.
During her three days of testimony in New York, Ellison portrayed Sam Bankman-Fried, her former boyfriend and boss at Alameda Research, as the mastermind behind a criminal conspiracy. She revealed how he instructed his employees to cover their tracks and showed no remorse for stealing billions from customers of his FTX crypto exchange.
Ellison, a slight woman with large glasses, took the jury through spreadsheets, internal documents, and private Signal chats. Her testimony painted a vivid picture of the once crypto golden boy’s involvement in a years-long criminal scheme.
She described feeling trapped and constantly fearful of the consequences if Bankman-Fried’s empire were to crumble. The possibility of customers withdrawing from FTX and the harm it would cause weighed heavily on her.
As the star witness in the government’s case against Bankman-Fried, Ellison’s testimony holds significant weight. If convicted, he could face a lifetime in prison. Currently, he pleads not guilty.
Ellison revealed that she often felt like an “unequal partner” in her on-and-off relationship with Bankman-Fried, as he was always her boss. She depended on him for major decisions and felt pulled into his warped moral worldview.
Bankman-Fried believed in doing whatever would maximize utility, disregarding traditional moral rules like “don’t lie” and “don’t steal.” Ellison admitted that she became more comfortable with actions she would have previously rejected, such as falsifying balance sheets and mishandling customer funds.
Despite his disregard for moral rules, Bankman-Fried emphasized the need to be careful about leaving records of sensitive discussions. He warned his employees that putting things in writing could lead to legal trouble.
The court was played a secret recording of an Alameda staff meeting, where Ellison disclosed Bankman-Fried’s order to use customer money to pay debts at the trading firm.
Educated at Stanford University, Ellison joined Alameda after her time at Jane Street as a trader. She quickly realized that Bankman-Fried had not disclosed an internal crisis over lost funds at the trading firm. Despite the objections of half of Alameda’s early staff, Ellison remained loyal.
When Bankman-Fried stepped down as Alameda chief executive, Ellison took on the role of co-chief executive with Sam Trabucco. However, Trabucco eventually quit, leaving Ellison in sole charge.
During this time, Ellison became increasingly unhappy with Bankman-Fried’s preference for another trading shop, Modulo Capital. She admitted to feeling a desire to “crush” Modulo.
Following their breakup, Ellison avoided direct conversations with Bankman-Fried and limited their interactions to Signal and memos.
Ellison expressed her desire to quit, but Bankman-Fried convinced her that it would cause Alameda to collapse. Despite being paid millions in bonuses and having significant crypto holdings, Ellison had a smaller ownership stake in FTX compared to male members of Bankman-Fried’s inner circle.
Prosecutors presented documents prepared by Ellison, including comparison balance sheets created to deceive lenders and conceal FTX customer money. She also described stress tests modeled for Bankman-Fried to determine Alameda’s ability to repay what it had taken from FTX during a crypto market downturn.
Ellison described the chaotic final days of FTX, including learning about the leak of Alameda’s balance sheet while on holiday in Japan. She managed the crisis from the company’s Hong Kong office before it ultimately went bankrupt.
After the FBI raided her parents’ house and seized her personal belongings, Ellison pleaded guilty and agreed to cooperate with the government.
Throughout her marathon testimony, Ellison maintained a calm demeanor, occasionally punctuated by nervous laughter or pauses. Prosecutors noted Bankman-Fried’s dismissive and mocking reactions as she spoke.
She choked back tears as she described the relief she felt when FTX collapsed, knowing that she no longer had to lie.
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