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“I Didn’t Feel Good About It” – Caroline Ellison Continues Compelling Testimony in SBF Trial

Julia Smith
Last updated: | 3 min read
SBF trial - Ellison testimony

Former Alameda Research CEO Caroline Ellison continued her powerful testimony against FTX founder Sam Bankman-Fried in Manhattan Federal Court Tuesday. 

During her time on the witness stand, Ellison painted Bankman-Fried as a “very ambitious” risktaker willing to endanger customer funds for his own ideals. 

The ex-girlfriend of Bankman-Fried recalled that Bankman-Fried mentioned he would be willing to flip a coin if one side had the option of destroying the world so long as the other side could make “the world twice as good.” 

Moreover, Ellison recalled Bankman-Fried saying that there was “a 5% chance that he would become the President of the United States.”

Bankman-Fried asked Ellison to “borrow” customer funds

Ellison alleged Bankman-Fried directed her to “borrow” customer funds from FTX and distribute them to Alameda Research as the company struggled to obtain loans. 

“(Bankman-Fried) said FTX would be a good source of value,” Ellison stated. 

When FTT, FTX’s primary digital token, was created in 2019, Alameda’s desperate loan situation improved when it became the currency’s primary holder. From there, Bankman-Fried “directed” Ellison to put FTT on Alameda Research’s balance sheet to obtain more loans while the company would purposely purchase FTT in order to keep its value afloat.

Ellison noted that it was “somewhat misleading to put it on the balance sheet because they couldn’t sell it for that much.”

“We tended to be pretty careful about not discussing it openly,” Ellison remarked.

In one instance, Ellison recalled a situation where Bankman-Fried got upset at her for not being more careful in discussing Alameda Research’s fraudulent relationship with FTT in FTX’s Hong Kong office. Ellison stated Bankman-Fried then told her “to keep these conversations between us.”

Ellison: “I would always ultimately defer to Sam” 

Beginning as a trader at the crypto hedge fund, Bankman-Fried asked Ellison to become co-CEO of the company in 2021. However, Ellison often felt overwhelmed, stating she “wasn’t that experienced.”

“I would always ultimately defer to Sam,” she said.   

Complicating matters, Bankman-Fried began a sexual relationship with Ellison in 2018. By 2020, the two were dating. However, they broke up in 2021 before getting back together later in the year.

Ellison noted she often “wanted more” in her relationship with Bankman-Fried, calling him “distant” and feeling like he wasn’t “paying attention” to her.” Ellison also alleged that Bankman-Fried wanted to keep their relationship relatively under wraps. These sentiments ultimately contributed to their final breakup in 2022.

Meanwhile, Ellison became concerned over Alameda Research’s use of FTX customer funds, calling it “a risk.”

“FTX marketed itself as a safe, reliable, and highly-regulated exchange,” the former Alameda CEO said, “I’d feel uncertain leaving a lot of money there…”

Alameda’s unlimited credit line, Robinhood shares bought with customer funds: “I didn’t feel good about it”

When she questioned whether an audit Bankman-Fried requested to pull in investors would uncover Alameda Research’s seemingly “unlimited” line of credit, the FTX founder reassured her otherwise.

“No, don’t worry, the auditors aren’t going to look that,” Bankman-Fried allegedly remarked. 

According to Ellison, Bankman-Fried used these customer funds for a number of political donations, observing he could donate a “relatively small amount” for “influence and recognition.” Equally important, the now disgraced FTX founder used these funds for a $2 billion venture investment, FTX Ventures

Similarly, Bankman-Fried bought nearly $650 million worth of shares from Robinhood Markets, entirely paid for by Alameda Research. However, Bankman-Fried moved the shares to a separate account so as to avoid disclosing it to the public.

“I didn’t feel good about it,” Ellison said.

Currently, Ellison is facing up to 110 years in prison for seven different fraud charges, all of which she has pleaded guilty to. She is testifying under a cooperation agreement with the US government in hopes of a reduced sentence and is expected back on the witness stand tomorrow.

It is still unclear whether Bankman-Fried will testify in his own defense. reporter Julia Smith is on the spot in the court and will be reporting daily on the proceedings. 

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