On a Wednesday afternoon in SDNY’s courtroom 26A, Caroline Ellison cried on the witness stand after reading a text message she had sent to Sam Bankman-Fried last November. It was Ellison’s second day of testimony against Bankman-Fried, her former boss and boyfriend, who faces seven counts related to fraud. “That was overall the worst week of my life,” she sobbed. “It’s something that had been in my mind every day, worrying about what would happen when the truth finally came out.”
Now, the truth is out. FTX collapsed in spectacular fashion last November. Revelations surfaced that Alameda Research, FTX’s secretive sister company, had been misappropriating billions worth of customer funds from the crypto exchange. (Bankman-Fried has pleaded not guilty to his charges.) Ellison, who was then the CEO of Alameda, quickly signed a cooperation agreement with the U.S. government and was set to star as a key witness. At trial, the autopsy appears damning.
Ellison’s electrifying testimony, which lasted nearly eight hours on Wednesday, introduced new twists and turns in a story that had already been scrupulously poured over by the media. Ellison herself, who has been completely silent since the collapse, has weathered public humiliation at the hands of her former lover. (Notably, Bankman-Fried got his bail revoked for leaking her personal writings describing their tumultuous relationship to The New York Times.) Now, it’s her turn to speak out, and she knows where the bodies are buried.
One of the most shocking revelations included testimony that Bankman-Fried and co-conspirators bribed a Chinese official $100 million in 2021 to unfreeze $1 billion worth of Alameda funds that had been stuck on the China-based crypto exchange OKX. When legal strategies didn’t work, Ellison said they tried to use various trading strategies to move funds from the frozen accounts into “other accounts.” These other accounts were set up using the identities of sex workers, Ellison says she was told.
“On OKX we made several accounts using the IDs of different people who I believe were Thai prostitutes, and we tried to basically have our main account lose money and have those other accounts make money, so do very imbalanced trades between the two accounts so those other accounts would be able to make money and withdraw it,” Ellison said. When that attempt was unsuccessful, Ellison said she was told to “send this money to these addresses.” In a later note to Bankman-Fried summarizing Alameda’s major profit and losses for the year, she referred to the bribe as “the thing.”
Ellison, who first became romantically involved with Bankman-Fried in 2018, dated the former crypto billionaire on and off until the spring of 2022. She said Bankman-Fried was ambitious, and that he had once told her he had a five percent chance of becoming the president of the United States. Bankman-Fried’s ambitions also included rubbing shoulders with heads of state — in the fall of 2022, Ellison said Bankman-Fried was preoccupied with raising capital by selling shares of his FTX to Saudi prince Mohammed bin Salman, or MBS. It was an attempt to cover up the alleged fraud. “If we were able to raise money, that was money that we could use to repay the money we had borrowed from FTX customers,” said Ellison.
Their romantic relationship and the power dynamics at play between the two have raised the stakes of an already high-profile trial. In a fiery sidebar, the prosecution argued to the judge that Bankman-Fried was intimidating Ellison with laughs, scoffs, and head shakes during her testimony. “Given the history of this relationship, the prior attempts to intimidate her, the power dynamic, their romantic relationship, and I would ask that defense counsel tell him to control his visible reactions to her testimony,” said the prosecutor. In her Tuesday testimony, Ellison said she essentially committed the crimes at the direction of Bankman-Fried. In opening arguments, the defense said Bankman-Fried instructed her to hedge risks at Alameda, which they argued she failed to do. The defense is further expected to discredit her direct testimony, including prodding into her and Bankman-Fried’s sex life and inquire into alleged drug use.
The prosecution has painted a portrait of Bankman-Fried as a distant, controlling boyfriend, who sometimes made Ellison cry. “I often shared feelings about being unhappy with our relationship,” said Ellison. “I shared concerns about our personal and professional relationships affecting each other … it made me feel bad. It made me feel like an unequal partner in our relationship.” Ellison is expected to take the stand Thursday morning for cross-examination. After she concludes her testimony, walking down the aisle and toward the courtroom exit, it will likely be the final time she’ll face Bankman-Fried.