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

First they were colleagues on a trading floor in New York. Then they were friends running a start-up together in Hong Kong. Eventually they became partners in a turbulent office romance chronicled in tabloid headlines around the world.

On Tuesday, in a packed Manhattan courtroom, the relationship between Sam Bankman-Fried and Caroline Ellison took another turn. The two faced each other for the first time since the cryptocurrency trading companies they built together, FTX and Alameda Research, collapsed in November.

Ms. Ellison, 28, took the stand on the fifth day of Mr. Bankman-Fried’s trial on conspiracy and fraud charges stemming from FTX’s implosion. She began by taking more than 10 seconds to identify Mr. Bankman-Fried when a prosecutor asked her to point him out.

Then over roughly 15 minutes of initial testimony, Ms. Ellison repeatedly blamed Mr. Bankman-Fried, 31, for crimes that led to FTX’s implosion. She testified that he instructed her to draw from FTX customer funds to finance venture investments and loan repayments by Alameda Research, a crypto hedge fund that she oversaw for him. She said Alameda took around $14 billion, only some of which it was able to repay.

“He directed me to commit these crimes,” Ms. Ellison said, as Mr. Bankman-Fried sat across the room flanked by his lawyers.

As the government’s star witness — and by far Mr. Bankman-Fried’s most widely discussed associate — Ms. Ellison is a key figure in the trial and her testimony has been a highly anticipated moment.

She is regarded as a chief accomplice to Mr. Bankman-Fried, who became a symbol of hubris and dangerous risk taking across the cryptocurrency industry after he was charged last year with masterminding a sweeping conspiracy to steal billions of dollars in deposits from FTX’s customers. Her romantic relationship with Mr. Bankman-Fried, whom she dated on and off, gave her unique access to the FTX founder as he built his crypto empire.

Ms. Ellison on Tuesday took more than 10 seconds to identify Mr. Bankman-Fried when a prosecutor asked her to point him out. Credit…via the Office of the United States Attorney for the Southern District of New York

In December, Ms. Ellison pleaded guilty to fraud and conspiracy. She joined two other former FTX executives — Gary Wang and Nishad Singh — in agreeing to cooperate with the prosecutors pursuing Mr. Bankman-Fried. A fourth former top executive, Ryan Salame, also pleaded guilty but is not cooperating with the authorities.

Mr. Bankman-Fried has pleaded not guilty. He could receive what would amount to a life sentence if convicted.

As the criminal investigation unfolded over the past year, Mr. Bankman-Fried turned Ms. Ellison into an important element of his defense. He has argued that she ignored his instructions and made mistakes in managing Alameda that contributed to FTX’s failure.

A few weeks before the trial, Mr. Bankman-Fried had his bail revoked and was sent to jail after a judge ruled that he had tried to intimidate Ms. Ellison by leaking her private writings to The New York Times.

In her testimony on Tuesday, Ms. Ellison briefly explained her history with Mr. Bankman-Fried. The pair met more than five years ago at the New York trading firm Jane Street, where Mr. Bankman-Fried worked after college. They bonded over a shared commitment to effective altruism, a philanthropic movement popular in tech circles, and eventually became romantically involved. They also dated for “a couple of years,” she testified.

In 2018, Ms. Ellison joined Mr. Bankman-Fried at Alameda, where she worked as a trader and was then promoted to chief executive. She moved with him from Alameda’s original headquarters in the San Francisco Bay Area to Hong Kong, and then later to the Bahamas, where FTX and Alameda were based when they imploded.

Mr. Bankman-Fried and Ms. Ellison lived together in a luxurious penthouse on the Bahamian island of New Providence, along with eight other friends and executives, including Mr. Wang and Mr. Singh.

Ms. Ellison was often unhappy. She was anxious about her relationship with Mr. Bankman-Fried, and feared that she wasn’t qualified to run a company as complex as Alameda.

“At the end of the day I can’t wait to go home and turn off my phone and have a drink and get away from it all,” she wrote to Mr. Bankman-Fried in February 2022, in one of the private notes obtained by The Times.

This is a developing news story. Stay tuned for updates.

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