Caroline Ellison Blames Sam Bankman-Fried for Misuse of FTX User Funds at Trial

Former FTX CEO Sam Bankman-Fried (SBF) observed in a defensive role as his former business associate and girlfriend Caroline Ellison testified at his criminal trial.

According to reports from the courtroom on October 10, Ellison admitted to fraud during her time at Alameda under Bankman-Fried’s leadership. The former CEO of Alameda reportedly shifted the blame for the misuse of FTX user funds directly onto SBF, claiming he ‘set up the systems’ that led to Alameda taking approximately $14 billion in user funds from FTX.

– Alameda took several billion dollars from FTX users and used it for investments. I sent balances that made Alameda look less risky than it was – Ellison said, according to reports.

Ellison met Bankman-Fried through their work at Jane Street Capital, and SBF convinced her to leave the investment firm and join his crypto-focused endeavors. Reports suggest that the two have largely not been in contact since the collapse of FTX in November 2022.

Ellison’s relationship with SBF is one of the key issues in the charges facing the former CEO, as he was in charge of the crypto exchange while she led a team at Alameda. The fraud charges against Bankman-Fried are based on his directing Alameda to access FTX user funds without user consent, which he used for purchases, including assets and donations for political campaigns.

FTX co-founder and former Chief Technology Officer Gary Wang testified starting October 5 as one of the first witnesses for the prosecution, claiming he committed crimes with Ellison and former engineering director Nishad Singh. During Wang’s cross-examination, it appeared that SBF’s attorneys were attempting to shift some of the blame for the exchange’s collapse onto Ellison, questioning the former Chief Technology Officer about her role. In opening statements, the defense argued that Ellison ignored Bankman-Fried’s request to hedge Alameda’s investments.

Ellison and Wang were among the first insiders of FTX and Alameda to plead guilty as part of a deal with U.S. authorities to testify. It is unclear whether Bankman-Fried will testify as part of his defense strategy.

The testimony of the former CEO of Alameda Research marked the fifth day of SBF’s criminal trial, where he faces seven fraud-related charges. He has pleaded not guilty to all counts and is expected to appear at a second criminal trial beginning in March 2024.