Sam “SBF” Bankman-Fried, the former CEO of FTX, is currently in the midst of a criminal trial, where his former business associate and girlfriend, Caroline Ellison, testified against him. Ellison confessed to committing fraud while working at Alameda under Bankman-Fried’s guidance. Reports from the courtroom on October 10 revealed that Ellison placed the blame for the misuse of FTX user funds on SBF, alleging that he “set up the systems” that allowed Alameda to take around $14 billion from the exchange.
According to Ellison’s statement in court, “Alameda took several billions of dollars from FTX customers and used it for investments. I sent balance sheets that made Alameda look less risky than it was.” Ellison and Bankman-Fried originally met while working at Jane Street Capital, and SBF convinced her to leave the investment firm and join his crypto-focused endeavors. However, reports suggest that the two had limited contact following the collapse of FTX in November 2022.
The relationship between Ellison and SBF is a key element in the allegations against Bankman-Fried. He is accused of directing Alameda to access FTX user funds without obtaining customers’ consent, using the funds for various purchases, including property and political campaign donations. Gary Wang, co-founder and former chief technology officer of FTX, was one of the first witnesses for the prosecution and attested to committing crimes with Ellison and former engineering director Nishad Singh. During the cross-examination of Wang, SBF’s defense team appeared to be shifting some of the blame for the exchange’s collapse onto Ellison by questioning Wang about her role. The defense claimed in their opening arguments that she disregarded Bankman-Fried’s request to hedge Alameda investments.
Ellison and Wang were among the initial insiders from FTX and Alameda to plead guilty to fraud charges as part of an agreement with U.S. authorities in exchange for their testimonies. It remains uncertain whether Bankman-Fried will testify during his defense.
The testimony of Caroline Ellison, the former CEO of Alameda Research, took place on the fifth day of SBF’s criminal trial. SBF faces seven charges related to fraud and has pleaded not guilty to all of them. Another criminal trial involving him is scheduled to begin in March 2024.