Ex-Alameda CEO Caroline Ellison testifies at Sam Bankman-Fried trial

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Caroline Ellison, the star witness in the trial against Sam Bankman-Fried, said the FTX founder had directed her and her ex-colleagues to steal roughly $10bn of customer deposits from the exchange, in testimony that is set to be a pillar of the government’s criminal case against the former cryptocurrency tycoon.

Ellison, the former head of FTX trading arm Alameda Research, took the stand just after 12:30pm local time in Manhattan, wearing a grey jacket over a red dress. When prompted by prosecutors, she calmly identified Bankman-Fried, whom she once dated, and was questioned for 10 minutes before the court adjourned for lunch.

“He directed me to commit crimes,” Ellison told the jury. “He was the one who directed us to take customer money and repay our loans.” She previously pleaded guilty to fraud and agreed to co-operate with prosecutors.

FTX collapsed in November after it was revealed that Alameda had secretly siphoned off billions of dollars in customer deposits on the exchange to repay loans and make a series of investments.

“Alameda took several billion dollars . . . from FTX customers,” Ellison said. She admitted to sending “balance sheets to [Alameda] lenders at the direction of Sam . . . that made Alameda’s balance sheet look less risky that it was.”

Ellison is the most anticipated witness in the trial, and a pivotal figure in the collapse of FTX and Alameda.

As the companies slid towards collapse, she reportedly told employees at Alameda that Bankman-Fried had approved a bailout of the group with FTX customer funds after Alameda’s massive bets on rising crypto prices, which had been funded with large borrowing, went wrong during the crypto crash in the spring of 2022.

Bankman-Fried met Ellison while they worked at trading firm Jane Street, and he later recruited her as one of the first traders at Alameda Research in 2018.

She was named co-chief executive in 2021 when Bankman-Fried gave up the title to focus on FTX, and to avoid questions about conflicts of interest between the two groups. Ellison took sole charge of Alameda last year when Sam Trabucco, a fellow trader, stepped down as co-chief executive. 

Bankman-Fried has implicitly laid much of the blame for FTX’s failure at Ellison’s feet, claiming that he was unaware of the depth of Alameda’s financial distress and the scale of its borrowing from FTX until shortly before both companies collapsed.

In opening arguments, Bankman-Fried’s defence lawyer, Mark Cohen, suggested Ellison was partly at fault. He said Bankman-Fried had urged her to hedge Alameda’s bets in favour of rising crypto prices in early 2022 — and that her failure to do so had made the firm vulnerable.

Bankman-Fried and Ellison, both high-school “matheletes” and the children of professors, had been involved in an on-again off-again romantic relationship for several years. A split in 2022 led to a breakdown in communication between the pair, even though Ellison still led a crucial part of Bankman-Fried’s empire. 

In private writings to Bankman-Fried, published by The New York Times, she wrote: “Not giving you the contact you wanted felt like the only way I could regain a sense of power.” Bankman-Fried’s bail was revoked and he was ordered to be jailed over the summer after the government alleged he had provided these documents to journalists at the paper to intimidate Ellison — an allegation he denies.