When Caroline Ellison, a mousy brown-haired girl with big glasses, takes the stand against Sam Bankman-Fried next week, the defense will likely try and blame her, at least partially, for the dramatic implosion of FTX.
Just eight years ago, Ellison first crossed paths with Bankman-Fried while he was working at the Manhattan trading firm Jane Street Capital and she was an intern.
Bankman-Fried was told he had to teach Ellison as well as the rest of the summer interns how to trade.
Bankman-Fried had taken the job at the Wall Street company after he graduated from the Massachusetts Institute of Technology, the same university where Ellison’s father taught economics and her mother was a visiting lecturer.
Her first impression of Bankman-Fried wasn’t great. She purportedly described him to friends and family as a little cold and curt.
New York wasn’t really his scene, and Bankman-Fried soon traded in life on the East Coast for the West, where he started drumming up plans for Alameda Research, a cryptocurrency trading firm.
Ellison, who had graduated from Stanford University with a degree in mathematics, moved to the East Coast, where she worked for Jane Street. When her bosses sent her to her alma mater on a recruiting trip in fall 2017, she looked up Bankman-Fried, and the two met for coffee in Berkeley.
He told her he was working on something he couldn’t really talk about but then started talking. By the end of their caffeinated chat, he had almost convinced her to join him on his new venture, according to a new book by Michael Lewis, Going Infinite: The Rise and Fall of a New Tycoon.
In March 2018, Ellison kissed both her Jane Street job and New York goodbye and moved to the Bay Area to work for Bankman-Fried.
Ellison has claimed she was shocked when she showed up at Alameda offices. Bankman-Fried had hired about 20 people who knew nothing about trading or cared all that much about crypto. But instead of heading home, she decided to stick it out.
Ellison quickly moved up the ranks and was named co-CEO of Alameda. It was during this time she was also linked romantically to Bankman-Fried, a self-proclaimed math nerd who routinely demanded his workers put in 18-hour days and played video games in front of them when they complained.
Less than two years after getting Alameda Research off the ground, Bankman-Fried and his buddy Gary Wang launched FTX as a platform to trade crypto tokens and derivatives. By October 2021, FTX was soaring and managed to raise $420 million in venture trading.
As Bankman-Fried’s star rose — he hobnobbed with celebrities such as pop star Katy Perry and her husband Orlando Bloom and made it onto the Forbes billionaires list — Ellison was going back and forth about their relationship. The two had dated on and off, and, according to private writings shown to the New York Times, Ellison was worried about “making things weird” and “causing drama” at work.
“It doesn’t really feel like there’s an end in sight,” she wrote in a February 2022 document.
By the end of the year, Ellison, her boyfriend-boss, and other higher-ups in the company would be under arrest and tangled in one of the biggest financial fraud scandals in U.S. history.
Federal prosecutors claim Bankman-Fried siphoned billions of dollars from unsuspecting customers to fund a lavish lifestyle and then lied to cover his tracks, and they said Ellison helped him do it.
Four of his friends, including Ellison, have already pleaded guilty to similar charges. Bankman-Fried’s defense team has hinted they plan on throwing Ellison under the bus.
Ellison knew Alameda had access to an unlimited line of credit at FTX that allowed the company to borrow customer funds without posting collateral. When the crypto market dipped last summer, she and other top brass agreed to borrow several billion dollars in customer funds from FTX to repay Alameda’s loans to lenders. Ellison told the authorities she and Bankman-Fried were in cahoots and put up misleading financial statements that hid what they had done.
Jurors in the Bankman-Fried trial are expected to hear a recording of a meeting that took place on Nov. 9, 2022, between Ellison and Alameda employees when she admits Bankman-Fried OK’d the funneling of customer funds to Alameda.