Caroline Ellison Writes About Ex-Crypto Mogul Sam Bankman-Fried

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Three months earlier than the cryptocurrency market imploded final yr, Caroline Ellison, the 27-year-old chief government of the crypto hedge fund Alameda Analysis, was racked with self-doubt.

“I’ve been feeling fairly sad and overwhelmed with my job,” Ms. Ellison wrote in a Google doc in February 2022. She added: “On the finish of the day I can’t wait to go house and switch off my cellphone and have a drink and get away from all of it.”

Ms. Ellison had quite a bit on her thoughts. She didn’t assume that she was nicely suited to operating Alameda or was a very decisive chief, she wrote in one other Google doc. She was additionally going by means of a breakup with Sam Bankman-Fried, the billionaire entrepreneur who had based Alameda after which FTX, one of many world’s largest cryptocurrency exchanges. They’d dated on and off, and Ms. Ellison anxious about “making issues bizarre” and “inflicting drama.”

“It doesn’t actually really feel like there’s an finish in sight,” she wrote within the February 2022 doc.

Now Ms. Ellison is poised to be a star witness at Mr. Bankman-Fried’s legal trial, which is scheduled for Oct. 2.

Mr. Bankman-Fried, 31, is accused of misusing billions of {dollars} taken from buyer accounts and faces eight counts of fraud and election regulation violations. His spectacular downfall, which despatched FTX and Alameda into chapter 11, remodeled Ms. Ellison from a robust — but comparatively non-public — determine right into a goal of tabloid hypothesis. In December, she pleaded responsible to fraud costs and agreed to cooperate with the federal prosecutors investigating her former boyfriend.

His case is dashing towards a courtroom showdown in Manhattan. Two different high FTX executives, Nishad Singh and Gary Wang, have additionally pleaded responsible and agreed to cooperate. In June, after weeks of authorized wrangling over the costs towards Mr. Bankman-Fried, the choose within the case set a brisk schedule for the run-up to the trial, asking prosecutors to provide you with a witness checklist and produce different last supplies. Prosecutors are anticipated to start making ready at the very least some witnesses in August, two folks with data of the matter stated.

As Mr. Bankman-Fried’s sometime-girlfriend and certainly one of his earliest hires, Ms. Ellison had distinctive perception into the FTX founder. She additionally recorded lots of her ideas in writing, making observations about her private {and professional} life in a handwritten diary and on Google paperwork which have circulated amongst attorneys concerned within the case, based on paperwork reviewed by The New York Occasions and 4 folks accustomed to the investigation.

The paperwork, which haven’t been beforehand reported, provide new perception into Ms. Ellison’s psychology throughout the last months of FTX. Ms. Ellison, now 28, was a prolific author whose Tumblr posts about Harry Potter and Jane Austen have been extensively dissected. However the Google paperwork are extra private and uncooked, with some instantly addressed to Mr. Bankman-Fried, illustrating the complexity of their relationship and her ambivalence about Alameda.

In a single Google doc addressed to Mr. Bankman-Fried in April 2022, Ms. Ellison wrote that an earlier breakup with him had “considerably decreased my pleasure about Alameda.” Life on the hedge fund, she added, “felt too related to you in a means that was painful.”

A consultant for Ms. Ellison’s authorized group and a lawyer for Mr. Bankman-Fried declined to remark. A spokesman for the U.S. lawyer’s workplace for the Southern District of New York in Manhattan, the unit prosecuting the case, additionally declined to remark.

Ms. Ellison, a Stanford graduate, bought to know Mr. Bankman-Fried at Jane Road, the quantitative buying and selling agency the place he labored after faculty. They shared a dedication to efficient altruism, the charitable motion that has gained adherents within the tech and finance industries.

After Mr. Bankman-Fried left Jane Road to start out Alameda in 2017, he recruited Ms. Ellison as a dealer. In 2021, he promoted her to co-chief government, alongside one other early rent, Sam Trabucco.

Mr. Bankman-Fried and Ms. Ellison additionally began an unsteady romantic relationship, with a number of breakups and reconciliations. At occasions, Ms. Ellison anxious that Mr. Bankman-Fried thought she wasn’t adequate. When he was round, she wrote within the February 2022 Google doc, she had “an intuition to shrink and change into smaller and quieter and defer to others.”

After one cut up, Ms. Ellison reduce off communication with Mr. Bankman-Fried. “I felt fairly damage/rejected,” she wrote within the April 2022 Google doc. “Not providing you with the contact you needed felt like the one means I may regain a way of energy.”

By final yr, Mr. Bankman-Fried had change into one of many world’s most outstanding crypto entrepreneurs, his face plastered on billboards and journal covers. His fame appeared to make life at FTX and Alameda more durable for Ms. Ellison.

Staying put meant “having to be round you on a regular basis, listening to folks speak about how nice you might be on a regular basis,” she wrote within the April 2022 doc.

Ms. Ellison was compensated far much less generously than different high executives at FTX and Alameda, although it’s unclear whether or not she was conscious of it. In accordance with court docket filings, the change’s founders and different key workers acquired $3.2 billion in funds and loans. Of that complete, $6 million went to Ms. Ellison, in contrast with $587 million for Mr. Singh, FTX’s head of engineering, and $246 million for Mr. Wang, one of many founders. Mr. Bankman-Fried acquired $2.2 billion.

In Might 2022, the crypto market crashed, sending coin costs spiraling and plunging a number of outstanding corporations into chapter 11. In the course of the disaster, regulators have asserted, Mr. Bankman-Fried, Mr. Wang, Mr. Singh and Ms. Ellison stuffed a gap in Alameda’s accounts utilizing billions in buyer funds deposited with FTX.

Even earlier than then, Ms. Ellison doubted her personal skills. Within the April 2022 doc, she made a listing of areas the place she struggled, together with “management” and “decisiveness.”

“Working Alameda doesn’t really feel like one thing I’m that comparatively advantaged at or nicely suited to do,” she wrote.

By final fall, Mr. Bankman-Fried had misplaced religion in Alameda. He thought of shutting the agency, based on court docket data, and invested greater than $400 million in one other buying and selling firm, Modulo Capital, which was led by a distinct former Jane Road dealer whom he had additionally dated.

Ms. Ellison expressed jealousy and resentment towards Modulo in a few of her writings, in addition to a sense that she was being squeezed out, two individuals who have seen the paperwork stated.

Mr. Bankman-Fried’s enterprise empire collapsed in November after a run on deposits uncovered an $8 billion deficit.

“I simply had an rising dread of today that was weighing on me,” Ms. Ellison wrote to him in a message that month, which was excerpted in court docket data. “Now that it’s truly occurring it simply feels nice to get it over with.”

In December, Mr. Bankman-Fried was arrested within the Bahamas, the place FTX was based mostly, and brought to a jail not removed from the posh penthouse that he and Ms. Ellison had shared with eight different roommates, together with Mr. Wang and Mr. Singh. Mr. Bankman-Fried is now underneath home arrest at his dad and mom’ house in Palo Alto, Calif.

Individuals who know Ms. Ellison say they’ve been struck by her earnestness and her willingness to confess her personal failings. In court docket in December, she stated she was “really sorry” for committing fraud. “I knew that it was improper,” she stated.

Ms. Ellison is anticipated to repeat that assertion at Mr. Bankman-Fried’s trial, which is anticipated to final 4 or 5 weeks. A lot of the trial will revolve round messages that Mr. Bankman-Fried and the three cooperators exchanged on the messaging app Sign, two folks briefed on the matter stated.

As a girl within the male-dominated crypto business, Ms. Ellison could seem extra sympathetic to the jury than the opposite cooperators, attorneys accustomed to the case stated. In interviews final yr, Mr. Bankman-Fried shifted some blame for the collapse to Alameda, saying he had little involvement within the hedge fund’s day-to-day administration.

Moira Penza, a former federal prosecutor, stated that the very best authorities cooperators accepted blame on the witness stand and that the “energy differential” between Ms. Ellison and Mr. Bankman-Fried may make her a compelling voice.

“This doesn’t strike me as an efficient technique for the defendant to be blaming down,” Ms. Penza stated. “Particularly with somebody who was as soon as a romantic accomplice.”

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