The government’s main witness in the criminal fraud case against the creator of FTX, Caroline Ellison, the former head of Sam Bankman-Fried’s cryptocurrency hedge fund, testified on Tuesday that she and her former employer had misled clients, investors, and lenders.
Ellison then listed her offenses from a courthouse in central Manhattan: “fraud, conspiracy to commit fraud, and money laundering.”
The owner of Alameda Research, Ellison, entered a plea of guilty in December to two counts of wire fraud, two counts of conspiracy to commit wire fraud, two counts of conspiracy to commit commodities fraud, two counts of conspiracy to commit securities fraud, and two counts of conspiracy to launder money. As part of his plea agreement with the government, the 28-year-old has agreed to assist the prosecution’s case against Bankman-Fried.
Before the court stopped for lunch, Ellison’s testimony, which began at 12:37 p.m., lasted less than 10 minutes. It started back up shortly after two in the afternoon and ran for two different blocks of an hour each. Ellison will probably testify for most of Wednesday as well, according to the prosecution.
Ellison gave a brief history of how she met Bankman-Fried while wearing a red dress, a loose gray blazer, and glasses. They first connected while she was an intern at New York-based proprietary trading firm Jane Street. She added that Bankman-Fried was her boss when they were dating and then worked together at Alameda for a few years.
In 2017, Ellison was one of Bankman-Fried’s first hires at Alameda. When the hedge fund was still operating out of its initial headquarters in the San Francisco Bay region, Bankman-Fried is said to have persuaded the Stanford graduate to quit her job at Jane Street and join Alameda as a trader.
Ellison stood up when Sassoon asked him to name the defendant and surveyed the area for approximately 30 seconds. Before identifying Bankman-Fried as seated “over there and wearing a suit,” she repeatedly turned her head to the right, then all the way to the left to the jury box. Ellison had earlier passed by, but the two had not exchanged glances.
Prior to the trial, Bankman-Fried, who was well known for his beach shorts and floppy hair, reportedly received a new haircut from a fellow prisoner in the Brooklyn jail where he has been detained since August.
According to Ellison, Bankman-Fried was Alameda’s first CEO and owner.
Bankman-Fried, 31, is accused of seven federal offenses, including wire fraud, securities fraud, and money laundering. These offenses are all connected to the failure of FTX and Alameda in the latter part of last year. Bankman-Fried might serve his entire life in prison if found guilty in the trial that started last week. He entered a not-guilty plea.