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Prosecution’s Strategy: Caroline Ellison’s Personal Notes to Serve as Key Evidence Against Former FTX CEO Sam Bankman-Fried

Hassan Shittu
Last updated: | 2 min read
Source: Adobe / Александр Поташев

In an August 14 submission to the U.S. District Court in the Southern District of New York, prosecutors stated their plan to introduce Caroline Ellison’s to-do lists and notes as evidence, including a note labeled “Things Sam is Freaking Out About.”

The legal case concerning ex-FTX CEO Sam Bankman-Fried has taken a fresh turn as prosecutors disclosed their intent to utilize personal writings from Caroline Ellison, former CEO of Alameda Research, a trading firm affiliated with FTX, as evidence in the criminal trial.

The prosecutors highlighted a list named “Things Sam is Freaking Out About,” summarizing discussions between Sam Bankman-Fried and Ellison about SBF’s business matters, including business worries, fundraising, Alameda’s trading hedges, negative media coverage about the hedge fund, and connections to FTX.

“The Government intends to offer into evidence certain handwritten and typed notes that Ellison maintained to keep track of the conspiracy’s activities,” reads the filing.

“For example, Ellison took notes at meetings with her co-conspirators at which they discussed, among other things, the financial health of Alameda and its liabilities to FTX.”

According to the prosecution, these notes are not considered inadmissible hearsay. They assert that the former Alameda CEO created these notes to record the supplied information and guide her role in the conspiracy.

Deficiency in User Funds Acknowledged by Caroline Ellison: Covert Recording Reveals Concerns Before FTX and Alameda Bankruptcy Filings

Among the evidence is a covert recording made by an Alameda employee of Ellison during a company-wide meeting on November 9, 2022—just 48 hours before the bankruptcy filings of FTX and Alameda.

In Ellison’s words, Alameda had procured “a significant amount of money through open-term loans and utilized it for various investments with limited liquidity,” a situation compounded by the crypto crash in 2022 that prompted most of these loans to be called.

Ellison stated, “To address these loan recalls, we had to secure substantial funds on FTX, resulting in a deficit of user funds on the platform,’ as recounted from the meeting.”

The filing also shows that Ellison discussed the issue with SBF, the exchange’s co-founder and CTO, Nishad Singh, and its director of engineering, Gary Wang.

During a meeting, an Alameda employee asked Ellison about others who knew about the deficit in FTX user funds. 

Ellison responded, “Yeah, I mean, I guess I talked about it with, like, Sam, Nishad, and Gary.”

Gary Wang, an FTX co-founder, and Nishad Singh, the exchange’s engineering director, have admitted guilt in fraud cases and are aiding prosecutors.

Another employee questioned Ellison about the choice to utilize FTX user deposits.

Ellison’s reported response was, “Um . . . Sam, I guess.”

The prosecution has requested the admission of evidence related to Bankman-Fried’s alleged activities. 

These activities include purportedly falsified statements to an unnamed bank, bribery of Chinese officials regarding frozen Alameda accounts, manipulation of the FTX token (FTT) on the exchange, and the selective prioritization of payments to creditors.

Bankman-Fried’s lawyers responded by filing a motion on August 14. They seek to exclude evidence obtained after July 1.

The defense argues that prosecutors did not promptly provide specific information, including the contents of Wang’s laptop and encrypted Telegram chats with Ellison.

The defense contends that these delays hindered their trial preparation.

Bankman-Fried is awaiting trial in Brooklyn’s Metropolitan Detention Center, scheduled for October. 

The court revoked his bail due to allegations that he leaked portions of Ellison’s diary entries to The New York Times.