Ex-lovers and former executives are picking sides and turning against each other in the legal battle shaping up after the stunning collapse in November of the FTX crypto exchange.
Caroline Ellison, the 28-year-old ex-lover and business associate of FTX CEO Sam Bankman-Fried, is cooperating with the government and pleaded guilty to multiple charges of fraud and conspiracy, CNN reported.
Ellison apologized before a federal judge in New York, saying that she and her former associates knowingly stole billions of dollars from FTX customers and tried to cover it up, according to court transcripts.
SBF, by comparison, has claimed ignorance of conflicts leading to the FTX collapse. In an interview with Andrew Ross Sorkin at the Nov. 30 New York Times annual DealBook summit, SBF said he didn’t “knowingly co-mingle funds” between FTX and his crypto trading firm and hedge fund, Alameda Research.
Three weeks after FTX declared bankruptcy and $1 billion in investor money evaporated, the DealBook audience applauded SBF, who once claimed his goal was “earning to give” billions to charity.
Ellison, the former CEO of Alameda, told the judge the hedge fund had virtually unlimited borrowing from FTX. She said she knew FTX would need to use customer funds to finance loans to Alameda and agreed to keep the two firms’ close relationship hidden from investors and customers. Ellison said she agreed with SBF and others to provide “materially misleading financial statements to Alameda’s lenders,” and prepared balance sheets that concealed the extent of Alameda’s borrowing, according to recently unsealed transcripts from Dec. 19 plea hearings.
“Bankman-Fried and Ellison had much more in common than prodigious MIT nerdery,” Jeffrey Gogo wrote for BeInCrypto.
Ellison’s parents are both economists at the Massachusetts Institute of Technology, where SBF earned a degree in physics in 2014.
A former trader at the financial firm Jane Street, Ellison lived in a five-bedroom Bahamas penthouse with SBF and 10 other top FTX lieutenants. SBF and Ellison were at times romantically involved, two people told the New York Times. CoinDesk has reported on relationships among FTX’s leadership team.
Ellison is a math whiz who loves Harry Potter. In her 2021 application for Forbes’ 30 Under 30 list, Ellison was asked what she would tell her younger self. “I would tell her to be less risk-averse and believe in herself more,” she wrote.
SBF recently told the New York Times he and Ellison were no longer in a romantic relationship.
Gogo described the top FTX leadership as “geniuses addicted to power.”
Psychologist Nadja Bester told BeInCrypto, “Since Bankman-Fried and Ellison are both from educated, higher-income childhood homes, one might consider that the wilful actions leading to the downfall of FTX and Alameda were likely less about financial need than the addictively powerful chance to opportunistically beat the system.”
The effective altruism movement, popular in Silicon Valley, calls on people to use data to maximize their efforts to have a positive impact on the world — something SBF got credit for attempting to do.
“Doubt now has emerged over whether Ellison, Bankman-Fried or their compatriots actually believed in the tenets of effective altruism, or if it served as an effective way to shield their alleged wrongdoing,” Forbes reported.
Ellison at one point appeared to have renamed her blog “Fake Charity Nerd Girl.”
