Former FTX CEO Sam “SBF” Bankman-Fried watched from the defense table as his former business partner and girlfriend, Caroline Ellison, testified at his criminal trial.
According to courtroom reports on October 10, Ellison accepted to fraud during his stay in Alameda under Bankman-Fried. The former Alameda CEO reportedly placed the blame squarely on SBF for the misuse of FTX user funds, claiming that he “established the systems” that led to Alameda taking approximately $14 billion from the exchange.
"Alameda took several billion dollars from FTX customers and used them for investments," Ellison reportedly said. “I sent out balance sheets that made Alameda look less risky than it was.”
Ellison met Bankman-Fried through her work at Jane Street Capital, and SBF convinced her to leave the investment firm and join its cryptocurrency-focused efforts. Reports have suggested that the two had been largely out of touch following the collapse of FTX in November 2022.
Sam Bankman-Fried included this photo with Caroline Ellison in a document he sent me, noting that she "was tremendously intelligent" but "deeply insecure." CAROLINE WITNESSED AGAINST SBF IN COURT THIS WEEK. pic.twitter.com/n9WXyBXfd1
—Tiffany Fong (@TiffanyFong_) October 10, 2023
Ellison's relationship with SBF is one of the issues at the heart of the allegations facing the former CEO, as he was in charge of the crypto exchange while she ran the team in Alameda. Bankman-Fried's fraud charges are based on her directing Alameda to essentially access FTX users' funds without the customers' consent, which she used for purchases including property and donations to political campaigns.
FTX co-founder and former CTO Gary Wang took the stand beginning Oct. 5 as one of prosecutors' first witnesses. claiming he committed crimes with Ellison and with former engineering director Nishad Singh. In questioning Wang, SBF lawyers appeared to be attempting to shift some of the blame for the exchange's collapse onto Ellison, questioning the former CTO about her role. In its opening arguments, the defense claimed it ignored Bankman-Fried's request to put a hedge on Alameda's investments.
Related: SBF seeks to investigate role of FTX lawyers in $200 million Alameda loans
Ellison and Wang were some of the first FTX and Alameda insiders will plead guilty as part of an agreement with US authorities for his testimony. It is unclear whether Bankman-Fried will take the stand as part of his defense strategy.
The testimony of the former executive director of Alameda Research marked the fifth day of the SBF criminal trial, where he faces 7 charges related to fraud. He has pleaded not guilty to all charges and is expected to appear in a second criminal trial set to begin in March 2024.
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