Caroline Ellison, the former CEO of Alameda Research and ex-girlfriend of Sam Bankman-Fried, took the stand to testify against the disgraced cryptocurrency mogul on Tuesday.
Bankman-Fried, the former CEO of bankrupt crypto exchange FTX, is currently at trial facing charges of fraud, money laundering, and campaign finance violations.
Ellison, who pleaded guilty to similar charges in December 2022, told the court that Bankman-Fried ‘directed me to commit these crimes.’
Ellison was the former CEO of Alameda Research, a trading firm founded by Bankman-Fried that served as a liquidity provider for FTX.
She also dated Bankman-Fried, who was jailed before his trial after he leaked her private diaries to the New York Times.
Ellison and Bankman-Fried met in 2016 when both worked for the trading firm Jane Street Capital.
Bankman-Fried left Jane Street in 2017 to eventually start FTX and Alameda Research. He recruited Ellison for Alameda in early 2018.
Both companies collapsed in November 2022 after FTX lost over $1billion in customer funds. Bankman-Fried was indicted by federal prosecutors a month later.
After the indictment against Bankman-Fried was unsealed, prosecutors revealed that Ellison and FTX co-founder Gary Wang agreed to testify against him.
Ellison agreed to plead guilty to charges of wire fraud, securities fraud, money laundering, and conspiracy to commit fraud as part of her deal with prosecutors.
Bankman-Fried’s trail began on October 2, months after he was extradited from his $30million home in the Bahamas.
Ellison was seen entering the Federal Courthouse in Manhattan on Tuesday, wearing dark sunglasses and a blue baseball cap low on her head.
On the witness stand, it took Ellison nearly a minute for her to recognize her ex-boyfriend, now wearing a suit instead of his typical gym shorts.
Ellison stated that Bankman-Fried directed her to take over $10billion in customer funds from FTX in order to pay Alameda Research’s debts.
‘Alameda took several billion dollars of money from FTX customers and used it for our own investments and to repay debts that we had,’ Ellison told the court.
She said that in the years prior to the collapse, Bankman-Fried had ‘set up a system that allowed Alameda to borrow from FTX.’
She also said that FTX provided Alameda Research a $65billion credit line. No other accounts at the exchange were offered more than $1billion in credit.
When Ellison asked if the FTX line of credit would cause them legal issues, Bankman-Fried allegedly told her, ‘don’t worry, the auditors aren’t going to look at that.’
She said she had doubts about the system that Bankman-Fried said up, telling the court ‘if I knew this was happening in another exchange I would feel uncomfortable leaving my money there.’
Ellison also said that Bankman-Fried was ‘very ambitious’ and ‘very interested’ in politics. Bankman-Fried donated $10million to Joe Biden’s presidential campaign in 2020.
‘He said he thought it was very effective that you could get very high returns in terms of influence by spending relatively small amounts of money,’ Ellison said.
He also reportedly told Ellison there was a ‘five percent chance’ he would become President himself.
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