The ex-girlfriend of Sam Bankman-Fried Caroline Ellison testifies as the government’s star witness in the criminal fraud charge against the FTX founder.
During the fifth day of Bankman-Fried’s fraud trial, the prosecution brought the former paramour and business partner to serve as CEO of Alameda Research – the hedge fund closely tied with the corrupt cryptocurrency exchange.
Caroline Ellison, an ex-girlfriend of FTX founder Sam Bankman-Fried and his top deputy, testified that they defrauded customers of the crypto exchange, investors in the company as well as lenders.
“He directed me to commit these crimes,” she said. https://t.co/I5MmS9iUGQ
— The Wall Street Journal (@WSJ) October 10, 2023
Ellison pleaded guilty in December, telling the court, “I knew it was wrong.” Meanwhile, Bankman-Fried has denied all seven fraud and conspiracy charges against him.
“The first time that we dated, we agreed to keep it secret and some people did wind up finding out,” Ellison said. “The second time that we dated, Sam agreed that we could make it public and we were living together.”
The 28-year-old resided with Bankman-Fried and other executives in a $40 million penthouse in the Bahamas, living working and managing the company from there. Ellison took the stand earlier this afternoon, telling the court that Alameda took roughly $14 billion from FTX customers and used it for investments and repaying lenders.
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“While you were working at Alameda, did you commit any crimes?” the prosecutor asked Ellison.
“Yes, we did,” Ellison said. “[Bankman-Fried] directed me to commit these crimes.”
When prosecutor Danielle Sassoon asked how Bankman-Fried was able to commit the alleged fraud, Ellison responded: “He was the one who set up these systems that allowed Alameda to take the money,” and was the one who oversaw it.
“I asked why he didn’t share more information. He apologized and said he didn’t know how to tell me,” Ellison recalled. “He said that FTX would be a good source of capital and he set up a system that allowed Alameda to borrow from FTX.”
Sassoon: Around how much FTX customer money did Alameda use to repay its lenders?
Ellison: Uh, in the ballpark of $10 billion.
Ellison reportedly cut a deal with federal prosecutors in late 2022, pleading guilty to wire fraud and multiple financial conspiracy charges. Lawyers have implied in the trial’s opening statements that her cooperation has been “extensive.”
Ellison’s plea proceedings said she had “agreed with Mr. Bankman-Fried and others to provide materially misleading financial statements to Alameda’s lenders.”
Judge Lewis Kaplan revoked the FTX founder’s bail and sent him to prison after entries from Ellison’s journal were published in the New York Times, finding probable cause for allegations of witness tampering.
Ellison is one of several members of Bankman-Fried’s inner circle to take the stand against him.
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