Three months before the crypto market crashed last year, Caroline Ellison, 27, the CEO of crypto hedge fund Alameda Research, was in a state of self-doubt.
“I feel quite unhappy and overwhelmed with my work,” Ellison wrote in a Google statement in February 2022. “At the end of the day, I can’t wait to get home and turn off my phone,” she added. Have a drink and get away from it all. “
Ellison had a lot on his mind. She didn’t think she was a good fit to run Alameda, nor was she a particularly decisive leader, she wrote in another Google document. She also went through a breakup with billionaire entrepreneur Sam Bankman-Fried, who founded Alameda and then FTX, one of the world’s largest cryptocurrency exchanges. The two dated off and on, but Ellison worried it would “make things weird” and “cause drama”.
“It doesn’t feel like the end is in sight at all,” she wrote in a February 2022 document.
Ellison is now set to be the star witness in Bankman-Fried’s criminal trial, scheduled for October 2nd.
Bankman-Fried, 31, has been charged with misusing billions of dollars withdrawn from customer accounts and faces eight counts of fraud and election law violations. His dramatic downfall, which bankrupted FTX and Alameda, has transformed Ellison from a powerful but relatively private figure to a target of tabloid speculation. In December, she pleaded guilty to fraud charges and agreed to cooperate with federal prosecutors investigating her ex-girlfriend.
His lawsuit is accelerating to a Manhattan courtroom showdown. Two other FTX executives, Nishad Singh and Gary Wang, also pleaded guilty and agreed to cooperate. After weeks of legal wrangling over the charges against Bankman-Fried, in June the judge in the case set a brisk pretrial schedule, asking prosecutors to prepare witness lists and other final documents. requested submission. . Prosecutors are expected to begin preparing at least some of the witnesses in August, according to two people familiar with the matter.
As Bankman Fried’s former girlfriend and one of his early recruits, Ellison had a unique insight into the FTX founder. She also recorded many of her thoughts in writing, handwritten diaries and circulated among lawyers involved in the case, according to documents reviewed by The New York Times and four people familiar with the matter. He made observations about his personal and professional life in Google Docs. investigation.
This document, previously unreported, provides new insight into Ms. Ellison’s psychology during the final months of FTX. Ellison, now 28, prolific writer His Tumblr posts about Harry Potter and Jane Austen were widely analyzed. But the Google documents are more personal and graphic, some addressed directly to Bankman-Fried, highlighting the complexity of their relationship and her ambivalence towards Alameda.
In a Google memo to Bankman-Fried in April 2022, Ellison wrote that her previous breakup with him “significantly diminished my excitement for Alameda.” She added that her life at her hedge fund was “feeling too tied up with you, it was painful.”
Representatives for Mr. Ellison’s legal team and a lawyer for Mr. Bankman-Fried declined to comment. A spokesman for the U.S. Attorney’s Office for the Southern District of Manhattan, New York, which is investigating the case, also declined to comment.
Ellison, a Stanford University graduate, met Bankman-Fried at Jane Street, a fixed-quantity trading firm where she worked after graduating from college. They shared their commitment to effective altruism, a philanthropic movement gaining followers in the tech and financial industries.
Ellison was hired as a trader after Bankman-Fried left Jane Street to found Alameda in 2017. In 2021 he will promotion She became co-CEO alongside fellow early hire Sam Trabucco.
Bankman-Fried and Ellison also broke up and got back together again, starting a precarious relationship. Ellison sometimes worried that Bankman-Fried thought she wasn’t good enough. In a February 2022 Google document, she wrote that when he was around, he had an “instinctive instinct to flinch and be small and quiet and listen to others.”
After breaking up, Ellison cut contact with Bankman-Fried. “I felt quite hurt/rejected,” she wrote in an April 2022 Google document. “I felt like the only way I could regain my power was by not giving you the contact you wanted.”
By last year, Bankman-Fried had become one of the world’s most prominent cryptocurrency entrepreneurs, appearing on billboards and magazine covers. His fame seems to have made life at FTX and Alameda difficult for Ellison.
Staying still means “having to be close to you all the time and listening to people talking all the time about how great you are,” she wrote in an April 2022 memo. rice field.
Mr. Ellison was compensated much less generous Whether she was more aware of it than other executives at FTX and Alameda, though I’m not sure. The exchange’s founders and other key employees received $3.2 billion in payments and loans, according to court filings. Of that sum, $6 million went to Ellison, $587 million to FTX’s head of engineering, Xing, and $246 million to co-founder Wang. given a dollar. Bankman-Fried received $2.2 billion.
In May 2022, the cryptocurrency market crashed, coin prices skyrocketed, and several high-profile companies went bankrupt. During the crisis, regulators alleged Bankman-Fried, Wang, Singh and Ellison used billions of dollars in customer funds deposited with FTX to fill holes in Alameda accounts.
Even before that, Ellison had doubts about his abilities. In her April 2022 document, she made a list of areas she struggled with, including “leadership” and “decision.”
“Running the Alameda just doesn’t feel like anything to me.” Something you’re relatively good at, or good at,” she wrote.
By last fall Bankman-Fried had lost faith in Alameda. He considered closing the firm and invested more than $400 million in Modulo Capital, another trading firm headed by another former Jane Street trader with whom he was also dating, according to court records.
In parts of the book, Ellison expressed jealousy, resentment and feelings of being exploited by Mr Modulo, according to two people familiar with the document.
Bankman-Fried’s business empire collapsed in November when a bank run uncovered an $8 billion deficit.
That same month, Ms. Ellison wrote in a message extracted from court records that she was “dreading this day and weighing it down more and more.” “Now that it’s really happening, it’s really nice to be able to get through it.”
In December, Bankman-Fried was arrested in the Bahamas, home of FTX, and taken to jail not far from the luxurious penthouse he and Ellison shared with Mr. Wang and eight other roommates, including Mr. Wang. was done. Shin. Bankman-Fried is currently under house arrest at his parents’ home in Palo Alto, California.
Those who knew Ellison say they were struck by her seriousness and willingness to admit her mistakes. In court in December, she said she was “really sorry” for committing her fraud. “I knew it was wrong,” she said.
Ellison is expected to repeat that allegation at Bankman-Fried’s trial, which is expected to last four to five weeks. Two people briefed on the case said much of the trial revolved around messages exchanged between Bankman-Fried and three of his collaborators on the Signal messaging app. .
As a woman in the male-dominated cryptocurrency industry, Ellison may seem more sympathetic to jurors than other collaborators, according to lawyers familiar with the case.in an interview last yearBankman-Fried said he had little involvement in the day-to-day management of the hedge fund and passed some of the blame for the bankruptcy onto Alameda.
Former Federal Prosecutor Moira Penza Says Government’s Best Allies Admit Responsibility on Witness Stand, Says ‘Power Gap’ Between Ellison and Bankman-Fried Convinces Her Voice He said it could be powerful.
“I don’t think this is an effective strategy to denounce the defendant,” Penza said. “Especially with someone who was once a romantic partner.”
