Caroline Ellison, Adviser to Sam Bankman-Fried, Says He ‘Directed’ Her to Commit Crimes

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Caroline Ellison, a detailed adviser and former girlfriend of the disgraced cryptocurrency mogul Sam Bankman-Fried, mentioned on Tuesday that she conspired with him to steal billions of {dollars} from clients of his alternate, FTX.

Ms. Ellison took the witness stand in entrance of a packed room on the federal courthouse in Manhattan, the place Mr. Bankman-Fried is standing trial for fraud and conspiracy costs associated to the collapse of FTX. When a prosecutor requested her to determine Mr. Bankman-Fried within the courtroom, she took greater than 10 seconds to reply. Then she mentioned a number of occasions that he had “directed” her to misuse FTX buyer cash.

In quarter-hour of preliminary testimony, Ms. Ellison mentioned Mr. Bankman-Fried informed her to make use of FTX buyer deposits to fund investments and mortgage repayments by Alameda Analysis, a buying and selling platform that she ran for him. She mentioned the buying and selling agency borrowed round $14 billion, solely a few of which it was capable of repay.

“He directed me to commit these crimes,” Ms. Ellison, 28, mentioned.

Ms. Ellison is the federal government’s star witness in Mr. Bankman-Fried’s trial — and by far his most generally mentioned affiliate.

She is thought to be a chief confederate to Mr. Bankman-Fried, 31, who grew to become an emblem of hubris and harmful risk-taking throughout the cryptocurrency trade after he was charged final 12 months with masterminding a sweeping conspiracy to steal billions of {dollars} in deposits from FTX’s clients. She additionally dated Mr. Bankman-Fried on and off, giving her distinctive entry to the FTX founder.

In December, Ms. Ellison pleaded responsible to fraud after FTX’s collapse. She joined two different former FTX executives — Gary Wang and Nishad Singh — in agreeing to cooperate with the prosecutors pursuing Mr. Bankman-Fried. A fourth former prime government, Ryan Salame, additionally has pleaded responsible however is just not cooperating with the authorities.

Mr. Bankman-Fried has pleaded not responsible. He might obtain what would quantity to a life sentence if convicted.

Because the investigation into Mr. Bankman-Fried unfolded over the previous 12 months, he has turned Ms. Ellison into an essential aspect of his protection. He has argued that she ignored his directions and made errors in managing Alameda that contributed to FTX’s failure.

A couple of weeks earlier than the trial, Mr. Bankman-Fried had his bail revoked and was despatched to jail after a choose dominated that he had tried to intimidate Ms. Ellison by leaking her personal writings to The New York Occasions.

In her testimony on Tuesday, Ms. Ellison briefly defined her historical past with Mr. Bankman-Fried. The pair met on the excessive frequency buying and selling agency Jane Road, the place Mr. Bankman-Fried labored as a dealer after faculty. They bonded over a shared dedication to efficient altruism, a philanthropic motion widespread in tech circles, and finally grew to become romantically concerned.

In 2018, Ms. Ellison joined Mr. Bankman-Fried at Alameda, the place she labored as a dealer and was then promoted to chief government. After Mr. Bankman-Fried moved Alameda to the Bahamas, he and Ms. Ellison lived collectively in an opulent penthouse, together with eight different pals and executives, together with Mr. Wang and Mr. Singh.

Ms. Ellison was typically sad. She was anxious about her relationship with Mr. Bankman-Fried, and feared that she wasn’t certified to run an organization as advanced as Alameda.

“On the finish of the day I can’t wait to go residence and switch off my cellphone and have a drink and get away from all of it,” she wrote to Mr. Bankman-Fried in February 2022, in one of many personal notes obtained by The Occasions.

This can be a creating information story. Keep tuned for updates.