Sam Bankman-Fried Ex-Girlfriend Caroline Ellison Takes Witness Stand Against FTX Founder

Testimony in the case against Sam Bankman-Fried, the co-founder of cryptocurrency exchange FTX, took a dramatic turn as Caroline Ellison, a former associate of Bankman-Fried, accused him of instructing her to embezzle funds from FTX's customers to repay loans to Alameda Research, a crypto trading firm she was leading, per NBC News.

During her court appearance, Ellison claimed that Bankman-Fried ordered her to engage in these criminal activities.

She revealed that Alameda Research had siphoned approximately $10 billion from customers who had deposited their funds on the FTX exchange for digital currency trading.

According to Ellison, Bankman-Fried had established the system that enabled the unauthorized transfer of these funds.

Ellison also stated that Bankman-Fried directed her to send balance sheets to lenders in an attempt to minimize the perceived risk associated with Alameda's financial losses.

This testimony followed that of FTX co-founder Gary Wang, who also appeared as a witness for the prosecution.

Both Bankman-Fried and Ellison faced charges related to financial crimes in December, with Ellison pleading guilty to multiple counts, including wire fraud, conspiracy to commit wire fraud, commodities fraud, securities fraud, and money laundering.

Caroline Ellison

Caroline Ellison's testimony began with a brief background explaining how she became acquainted with Sam Bankman-Fried.

Their initial encounter occurred when she worked as an intern at Jane Street, a proprietary trading firm in New York.

Subsequently, they both worked at Alameda and had been in a romantic relationship for a couple of years, with Bankman-Fried serving as her superior during that time, according to CNBC.

Ellison had been one of Bankman-Fried's earliest recruits to Alameda in 2017, and he had persuaded her to leave her position at Jane Capital to join Alameda as a trader when the hedge fund was still operating from its original office in the San Francisco Bay area.

In the courtroom, Ellison hesitated before identifying Bankman-Fried, as the two had not made eye contact during her entrance.

Sam Bankman-Fried, who had a distinct appearance characterized by disheveled hair and casual attire, had reportedly undergone a change in appearance before the trial, which included getting a haircut in jail.

Ellison mentioned that Bankman-Fried was the original CEO and owner of Alameda.

Sam Bankman-Fried Case

Prosecutors have accused Bankman-Fried of misappropriating billions in customer funds to support Alameda, make real estate investments, and donate over $100 million to US political campaigns, Reuters noted.

This ultimately led to FTX's bankruptcy in November 2022, causing widespread shock in financial markets and a tarnished reputation for Bankman-Fried.

The defendant has pleaded not guilty to charges of fraud and conspiracy, maintaining that any mistakes made during FTX's operation were not intentional theft.

Defense lawyer Mark Cohen had previously suggested that cooperating witnesses like Caroline Ellison may be presenting past decisions of Bankman-Fried in a negative light, decisions that they had initially concurred with.

Testimony from additional cooperating witnesses, such as former FTX engineering chief Nishad Singh, is anticipated during the trial, which could span up to six weeks.

Ellison's testimony revealed Bankman-Fried's ambitions, including viewing political contributions as a cost-effective method to accumulate power and even contemplating the possibility of becoming President with a 5% chance of success.

Bankman-Fried had donated $10 million to President Joe Biden's campaign, according to Ellison's statements in court.

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Written by: Bert Hoover

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