On Tuesday, Caroline Ellison, who has pleaded guilty to various crimes including wire fraud, commodities fraud, securities fraud, and money laundering, will take the witness stand as the government's top witness in the criminal prosecution of Sam Bankman-Fried, the ex-CEO of the now-defunct cryptocurrency exchange FTX. Ellison formerly operated the hedge fund Alameda Research, which was associated with FTX.
Caroline Ellison, the government's star witness in its criminal case against Sam Bankman-Fried, the former CEO of bankrupt crypto exchange FTX, is due to testify on Tuesday when the trial resumes in a downtown Manhattan courthouse. Ellison, who served as the head of FTX's sister hedge fund Alameda Research, pled guilty in December to a set of charges related to wire fraud, commodities fraud, securities fraud, and money laundering. Her plea deal with the government requires her cooperation in the prosecution of the defendant. The cross-examination of Gary Wang, FTX and Alameda's co-founder, will begin at 9:30am. Ellison is a valuable witness, as she was one of the earliest employees to join the company in 2017. Bankman-Fried had convinced her, then an employee at Jane Capital, to move to the Bay Area and join Alameda as a trader in its early days. Additionally, Ellison was the defendant's on-again off-again girlfriend for several years and at times was also his roommate.
Last week, U.S. Attorney Thane Rehn outlined his argument to the jury in his opening statement by claiming Bankman-Fried had used Ellison as a "front" for his control of Alameda, alleging a "scheme to take money from FTX and give it to Alameda" which Ellison would provide details of. Defense attorney Mark Cohen, however, presented a contrasting narrative in his opening remarks, describing Ellison as someone who had a firm grip on Alameda and was responsible for leading the company to its downfall. No mention of Ellison's co-CEO Sam Trabucco, whom she was a classmate of at MIT and had left Alameda in Aug. 2022, has been brought up thus far.
For months, the 28-year-old has been subject to intense speculation, with her private writings and public posts closely examined by the media and criminal attorneys. Ellison has publicly detailed her use of amphetamines, shared her exploration into polyamory on Tumblr, and the memos she sent to Bankman-Fried, featured in Michael Lewis's new book on the rise and fall of Bankman-Fried, provide an insight into their troubled relationship. Lewis included an excerpt from one of the memos in his book, in which Ellison wrote: "It feels like I'm doing a much worse job managing Alameda than you would if you were working on it full-time. I'm going to fuck up important things if you don't step in sometimes". She had followed Bankman-Fried from California to Hong Kong and then to the Bahamas, as he moved his crypto companies around, and the New York Times published a report in July that included leaked diary entries from Ellison, which caused Bankman-Fried to be thrown back in jail after Judge Lewis Kaplan revoked his bail for alleged witness tampering. In a February 2022 Google document shared with the Times, Ellison wrote: "I have been feeling pretty unhappy and overwhelmed with my job...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. It doesn't really feel like there's an end in sight." Lewis's reporting and the leaked diary entries indicate that Ellison was insecure in her relationship with Bankman-Fried and her role as CEO of Alameda. Court filings suggest Ellison's payment was significantly less than other senior Alameda executives; out of $3.2 billion allocated to the exchange's founders and top employees, $6 million was given to Ellison, while $587 million went to FTX's head of engineering Nishad Singh, $246 million to Wang, and $2.2 billion to Bankman-Fried.
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