Caroline Ellison, ex-CEO of cryptocurrency hedge fund Alameda Research, revealed elements of her relationship with ex-boyfriend and FTX Founder Sam Bankman-Fried.
Ellison testified against Bankman-Fried, also known as SBF, in his trial on the downfall of the crypto exchange which occurred in November 2022 and how her role as Alameda CEO contributed to the collapse.
In December 2022, Ellison alongside FTX Co-Founder Gary Wang, were both charged on multiple counts of fraud and immediately announced intentions to cooperate with US and Securities and Exchange Commission (SEC) authorities.
She revealed her romantic relationship “created some awkward situations” once she was anointed as Alameda CEO, as the hedge fund was the sister company of FTX which SBF ultimately stepped away from to focus on his role at the time as CEO of FTX.
Ellison stated she would “always ultimately defer to Sam” and despite her stating that SBF believing it would be “important to separate Alameda and FTX”, it would be the transferring of FXT funds to Alameda that led to the exchange’s downfall.
Reports emerged in November of last year that FTX was sending upwards of $10bn worth of FTT – FTX’s native token – to Alameda which proved unstable, as many exchanges such as Binance began liquidating their holdings.
This was the catalyst to the collapse of FTX, in which billions of dollars of investors’ money vanished and shook the crypto market to its core from a position it is yet to recover.
Ellison admitted Alameda was receiving money from FTX for its own personal investments to make Alameda’s balance sheet “look less risky to investors”.
The former Alameda CEO also revealed that SBF would take investor money to fund personal “investments and political donations”, as the FTX Founder’s political ties have long-been questioned in order to uphold a popular public image.
She revealed that SBF thought political donations were a key way to offer “very high returns” but she stated that she ‘did not feel good about it’ as she viewed it as “Alameda sort of… funnelling money to FTX executives”.
SBF’s trial began on 4 October at the New York City Federal Court and will conclude on 9 November. If the jury finds SBF guilty on all charges against him, he could face 115 years in prison.