Sam Bankman-Fried’s ex-girlfriend Caroline Ellison testifies against former billionaire in fraud case Former cryptocurrency billionaire Sam Bankman-Fried’s fraud case is unfolding in New York City, with a key witness taking to the stand.Caroline Ellison, the tech executive who ran Bankman-Fried’s hedge fund while sometimes dating him, told the court he directed her to commit fraud.Her testimony could play a major role in convicting the 31-year-old, which could see him imprisoned for decades.Who is Sam Bankman-Fried? He was the founder of crypto currency exchange called FTX which, at one point, was the second-largest cryptocurrency exchange in the world.He also ran a hedge fund called Alameda Research.The 31-year-old was one of the world’s wealthiest people on paper, with an estimated net worth of $32 billion, when his cryptocurrency businesses collapsed last November.FTX unravelled when a run on deposits and falling crypto prices left the company with an $US8 billion ($11 billion) shortfall.Bankman-Fried was accused of stealing billions of dollars in FTX customer funds to plug losses at Alameda Research.
He was later arrested in the Bahamas, extradited to the US and is now facing eight criminal charges including wire fraud, money laundering, and conspiracy to commit fraud on the United States.He has pleaded not guilty, arguing that while he made mistakes running FTX, he never intended to steal funds.Who is Caroline Ellison? The daughter of two Massachusetts Institute of Technology economics scholars, Ellison was a high achiever, taking part in maths competitions throughout high school and college.She graduated from Stanford University and began working as a quantitative trader at US trading firm Jane Street, where Bankman-Fried was also working.
Like him, she had grown interested during college in the effective altruism movement, which promotes data-driven philanthropy and encourages talented young people to take high-earning jobs and give generously to meaningful causes.Bankman-Fried left in 2017 to found Alameda.She told the FTX podcast she decided to join Bankman-Fried at Alameda despite lacking experience with cryptocurrencies to “maximise my impact”.
Bankman-Fried installed Ms Ellison as chief executive at Alameda, where she was paid $310,000 in salary with her biggest bonus of $31 million occurring in 2021.
The two were also on-and-off romantic partners and together in a luxury penthouse in the Bahamas.She told the court they were in a romantic relationship in summer 2020.
After a break-up, they resumed the relationship in autumn 2021 before breaking up for good in spring 2022, she said.Why is her testimony so important? Ms Ellison was one of the key members of Bankman-Fried’s team as he expanded his crypto empire.She’s one of three ex-members of the former billionaire’s inner circle who have pleaded guilty to fraud charges and agreed to cooperate with the Manhattan US Attorney’s office.Her firsthand account could be crucial to efforts by Manhattan federal prosecutors to convict Bankman-Fried on fraud charges.She testified for nearly three hours and is expected to return to continue the following day.What did Caroline Ellison say? Ms Ellison said she committed fraud, conspiracy to commit fraud and money laundering along with Bankman-Fried and others.
“He directed me to commit these crimes,” she said of Bankman-Fried, when asked by a prosecutor about his involvement.Repeatedly, Ms Ellison said Bankman-Fried was behind the biggest financial moves in his companies, to the point that bitcoins he created were sometimes called “Sam’s coins.” Ms Ellison depicted her former boyfriend and boss as an ambitious young man who had no qualms about sharing misleading financial information with lenders.She said the hedge fund, Alameda Research, took about $10 billion in FTX customer funds to repay its debts and make investments.The fund gained the money through a $65 billion line of credit it had on the exchange, and from funds FTX customers deposited into an Alameda bank account when FTX lacked its own account.
“He was the one who set up these systems that allowed Alameda to take the money and he was the one who directed us to take customer money to repay our loans,” she said.She described Bankman-Fried as “very ambitious” and envisioning eventually leading huge companies and using his money influentially.
He even thought there was a 5 per cent chance he’d become president of the United States some day, she said.Bankman-Fried’s trial started last week and is expected to stretch on for another month..
