Cameras flashed through the courthouse windows as Caroline Ellison waited tensely in the security line, wearing sunglasses and a baseball cap pulled down to conceal her face. But when she entered the 26th floor half an hour later, she tried to show the jury that she had nothing left to hide.
Over three days of testimony in New York, Ellison painted a picture of Sam Bankman-Fried, her ex-boyfriend and former boss at cryptocurrency trading firm Alameda Research, as the mastermind who instructed his employees to cover their tracks and saw nothing wrong with stealing billions from customers of his FTX crypto exchange.
The 28-year-old recalled how Bankman-Fried reduced her to tears in the study of the Bahamas penthouse they shared during a conversation about Alameda’s trading losses in August 2022, and how he screamed “shut the fuck up” at another female employee who strenuously objected to an alleged scheme to bribe Chinese officials to unlock frozen crypto funds — and then cut the employee’s payout when she quit.
Ellison’s painstaking testimony — including walking the jury through spreadsheets, internal documents and private Signal chats — described a years-long criminal conspiracy by the one-time crypto golden boy.
A slight woman with large glasses, Ellison described being pulled further into that conspiracy and crushed by the fear of what would happen if Bankman-Fried’s empire was revealed to be a house of cards.
“I felt trapped,” she said. “I was in sort of a constant state of dread . . . Every day I was worrying about the possibility of customers withdrawing from FTX . . . the possibility of this getting out . . . and the people who would be hurt by that.”
Ellison, who was by Bankman-Fried’s side throughout his empire’s stunning rise and fall, is the star witness in the government’s case against the FTX founder. If convicted, he could spend the rest of his life in prison. He has pleaded not guilty.
Ellison told the jury, which includes nine women, that she felt like an “unequal partner in our relationship” over the years that she and Bankman-Fried dated on and off, because he was always her boss. “For any major decisions, I would always run them by Sam.”
She said she was pulled into his warped moral worldview. Bankman-Fried thought that “the only moral rule that mattered was doing whatever would maximise utility” — meaning “the greatest good for the greatest number of people”, she said.
“He believed that the ways that people tried to justify rules like ‘don’t lie’ and ‘don’t steal’ within utilitarianism didn’t work.”
Years of working for Bankman-Fried made Ellison “more comfortable” with actions that her past self would have rejected, like sending false balance sheets to lenders and taking customer money, she said.
Bankman-Fried was also willing to take huge gambles on the slightest advantage of probability, she said. “He would be happy to flip a coin, if it came up tails and the world was destroyed” as long as the world would be twice as good if the coin came up heads, Ellison told the court.
Nevertheless, Ellison said Bankman-Fried lectured his staff on the need to be “careful” about what records they left of “sensitive” discussions. “He said that putting things in writing was one of the primary ways that financial firms get in legal trouble.”
On Thursday, the court heard extracts from a secret recording one employee made of an Alameda staff meeting shortly before the company collapsed where Ellison told employees Bankman-Fried had ordered the use of FTX customer money to pay debts at the trading firm, which he owned.
A child of academics, Ellison graduated from Stanford University before joining Jane Street as a trader, where she met Bankman-Fried — also the son of two professors. He recruited her to join Alameda in 2018 shortly after it was founded, but she quickly learned that he had not told her about an internal crisis at the trading firm over millions in lost funds.
Half of Alameda’s early staff quit in opposition to Bankman-Fried. Ellison was among those who remained. When Bankman-Fried dropped his title of Alameda chief executive in mid-2021 to show the company was separate from FTX, Ellison was named co-chief executive with another trader, Sam Trabucco. However, Trabucco quickly began to withdraw from his duties, formally quitting in mid-2022.
Left in sole charge of Alameda, Ellison was increasingly unhappy and in doubt about her ability to do the job. At times, Bankman-Fried seemed to undermine her confidence and showed a preference for another trading shop he had funded, Modulo Capital.
Asked by Bankman-Fried’s lawyers if she wanted to “crush” Modulo, Ellison said: “Yes, I remember having feelings like that.”
After the pair broke off their relationship, Ellison avoided one-on-one conversations and social settings, communicating with Bankman-Fried on Signal or through memos in Google Docs.
Ellison eventually told Bankman-Fried that she wanted to quit. He “told me that I couldn’t” because it might cause Alameda to collapse. “I trusted his opinion.” Although she was paid millions in bonuses and was briefly a paper billionaire thanks to her crypto holdings, Ellison had a much smaller ownership stake in FTX than the other, male, members of Bankman-Fried’s inner circle. He turned down her request for equity in Alameda.
Prosecutors walked the jury through documents Ellison prepared, including a side-by-side comparison of seven alternative balance sheets she tried out to make Alameda’s financial position look better to lenders and conceal its raid of FTX customer money. She also described in detail a spreadsheet with stress tests Bankman-Fried asked her to model in 2021, in which she analysed whether Alameda would be able to pay back what it had taken from FTX in a crypto market downturn.
Ellison described the chaotic final days of FTX. She learned about the leak of Alameda’s balance sheet while on holiday in Japan, and travelled to the company’s Hong Kong office to manage the crisis. When Alameda went bankrupt, she returned to live with her family in the US. She pleaded guilty and agreed to co-operate with the government after the FBI raided her parents’ house, and seized her phone, computer and personal journal.
Through the marathon testimony, Ellison spoke calmly with an occasional “um” or nervous giggle. Prosecutors complained to the judge that Bankman-Fried “laughed, visibly shaking his head, and scoffed” as she spoke.
Her voice broke on only a few occasions, and she held back tears as she described the relief she felt when FTX collapsed and she “didn’t have to lie anymore”.
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