Bankman-Fried’s ex-girlfriend to take stand again after day of dramatic testimony

Sam Bankman-Fried’s fraud trial enters its sixth day on Wednesday with more testimony from Caroline Ellison, his ex-girlfriend and the former CEO of the hedge fund associated with his collapsed cryptocurrency exchange.

Ellison testified on Tuesday that she was enmeshed in criminal activity while at the helm of Alameda Research, the sister hedge fund to FTX. She is the prosecution’s star witness in Bankman-Fried’s trial, in which he faces seven fraud and conspiracy counts for allegedly cheating customers out of $10bn. He has pleaded not guilty.

“While you were working at Alameda, did you commit any crimes?” the prosecutor Danielle Sassoon asked on Tuesday.

“Yes, we did,” she said. “[Bankman-Fried] directed me to commit these crimes.”

Shortly after Ellison started at Alameda around fall 2018 as a trader, she learned that the company was financially far sicker than she had known, she said on the stand. Ellison asked Bankman-Fried why he hadn’t told her before she started.

“I asked why he didn’t share more information. He apologized and said he didn’t know how to tell me,” Ellison recalled.

She said repeatedly that Bankman-Fried had set up a system to shuttle FTX customer funds to Alameda to cover loan expenses.

“He said that FTX would be a good source of capital and he set up a system that allowed Alameda to borrow from FTX,” Ellison said, adding that Bankman-Fried had not notified FTX’s customers that his hedge fund was using their money to make investments.

She likewise described the financial precariousness of FTX’s enormous loans to Alameda, which she said led to the exchange’s $8bn shortfall during the 2022 crypto downturn and its eventual bankruptcy.

“Around how much FTX customer money did Alameda use to repay its lenders?” Sassoon asked.

“Uh, in the ballpark of $10bn,” Ellison answered.

Ellison and Bankman-Fried wound up in a romantic entanglement that lasted years. She said that in 2018, she and the FTX founder “started sleeping together on and off”. Then, she said, “in the summer of 2020, we eventually started a romantic relationship”. They split in summer 2021 and got back together that fall. They broke up again in spring 2022.

“The whole time that we were dating he was also my boss at work, which created some awkward situations,” Ellison testified when asked about the dynamic. “There was a general theme that I sort of wanted more from our relationship ... I sort of felt like he was distant or not paying attention to me.

“The first time that we dated, we agreed to keep it secret and some people did wind up finding out. The second time that we dated, Sam agreed that we could make it public and we were living together,” Ellison also recalled. The two resided in a $40m Bahamas penthouse with other FTX executives.

Ellison pleaded guilty to wire fraud and conspiracy charges in December 2022 for her role in the stunning collapse of FTX and Alameda.