Caroline Ellison, Sam Bankman-Fried’s former partner, to star in crypto trial.
Caroline Ellison: The Mousy Intern Turned Co-CEO
When Caroline Ellison, a mousy brown-haired girl with big glasses, takes the stand against Sam Bankman-Fried next week, the defense will likely try and blame her, at least partially, for the dramatic implosion of FTX.
Just eight years ago, Ellison first crossed paths with Bankman-Fried while he was working at the Manhattan trading firm Jane Street Capital and she was an intern.
Bankman-Fried was told he had to teach Ellison as well as the rest of the summer interns how to trade.
Bankman-Fried had taken the job at the Wall Street company after he graduated from the Massachusetts Institute of Technology, the same university where Ellison’s father taught economics and her mother was a visiting lecturer.
Her first impression of Bankman-Fried wasn’t great. She purportedly described him to friends and family as a little cold and curt.
New York wasn’t really his scene, and Bankman-Fried soon traded in life on the East Coast for the West, where he started drumming up plans for Alameda Research, a cryptocurrency trading firm.
Ellison, who had graduated from Stanford University with a degree in mathematics, moved to the East Coast, where she worked for Jane Street. When her bosses sent her to her alma mater on a recruiting trip in fall 2017, she looked up Bankman-Fried, and the two met for coffee in Berkeley.
He told her he was working on something he couldn’t really talk about but then started talking. By the end of their caffeinated chat, he had almost convinced her to join him on his new venture, according to a new book by Michael Lewis, Going Infinite: The Rise and Fall of a New Tycoon.
In March 2018, Ellison kissed both her Jane Street job and New York goodbye and moved to the Bay Area to work for Bankman-Fried.
Ellison has claimed she was shocked when she showed up at Alameda offices. Bankman-Fried had hired about 20 people who knew nothing about trading or cared all that much about crypto. But instead of heading home, she decided to stick it out.
Ellison quickly moved up the ranks and was named co-CEO of Alameda. It was during this time she was also linked romantically to Bankman-Fried, a self-proclaimed math nerd who routinely demanded his workers put in 18-hour days and played video games in front of them when they complained.
Less than two years after getting Alameda Research off the ground, Bankman-Fried and his buddy Gary Wang launched FTX as a platform to trade crypto tokens and derivatives. By October 2021, FTX was soaring and managed to raise $420 million in venture trading.
As Bankman-Fried’s star rose — he hobnobbed with celebrities such as pop star Katy Perry and her husband Orlando Bloom and made it onto the Forbes billionaires list — Ellison was going back and forth about their relationship. The two had dated on and off, and, according to private writings shown to the New York Times, Ellison was worried about ”making things weird” and “causing drama” at work.
“It doesn’t really feel like there’s an end in sight,” she wrote in a February 2022 document.
By the end of the year, Ellison, her boyfriend-boss, and other higher-ups in the company would be under arrest and tangled in one of the biggest financial fraud scandals in U.S. history.
Federal prosecutors claim Bankman-Fried siphoned billions of dollars from unsuspecting customers to fund a lavish lifestyle and then lied to cover his tracks, and they said Ellison helped him do it.
Bankman-Fried is facing seven criminal charges, including money laundering and securities fraud. If he is convicted on all of the charges against him, he could be sentenced to 110 years in prison.
Four of his friends, including Ellison, have already pleaded guilty to similar charges. Bankman-Fried’s defense team has hinted they plan on throwing Ellison under the bus.
Ellison knew Alameda had access to an unlimited line of credit at FTX that allowed the company to borrow customer funds without posting collateral. When the crypto market dipped last summer, she and other top brass agreed to borrow several billion dollars in customer funds from FTX to repay Alameda’s loans to lenders. Ellison told the authorities she and Bankman-Fried were in cahoots and put up misleading financial statements that hid what they had done.
Jurors in the Bankman-Fried trial are expected to hear a recording of a meeting that took place on Nov. 9, 2022, between Ellison and Alameda employees when she admits Bankman-Fried OK’d the funneling of customer funds to Alameda.
How did Caroline Ellison’s background and experience contribute to her rise in the cryptocurrency world?
Elebrities and became a prominent figure in the cryptocurrency world — Ellison was right by his side, making strategic decisions and managing the day-to-day operations of FTX.
However, the success of FTX was short-lived. In recent months, the company has faced numerous controversies and regulatory issues, leading to significant losses for investors. Many have blamed Bankman-Fried for the downfall of FTX, accusing him of mismanagement and taking unnecessary risks.
Now, as the legal battle against Bankman-Fried unfolds, Caroline Ellison finds herself in the spotlight. The defense will likely attempt to place some blame on her, citing her position as co-CEO and her involvement in the decision-making processes of the company.
But it is important to take a step back and consider Ellison’s journey. She started as an intern, eager to learn and develop her skills in trading. Over the years, she proved herself to be a capable and talented individual, quickly rising through the ranks. Her educational background in mathematics and her experience at Jane Street provided her with a solid foundation for success in the financial world.
When Bankman-Fried approached her with his new venture, Ellison made a bold decision to join him. She took a risk, leaving her stable job and familiar surroundings in New York to embark on a new journey in the Bay Area. Despite the challenges and a team that lacked trading expertise, she persevered and worked hard to help build Alameda and later FTX.
It is unfair to simply attribute the success or failure of a company solely to its CEO. While Bankman-Fried may have been the face of FTX, Ellison’s contributions cannot be overlooked. As co-CEO, she played a crucial role in shaping the company’s strategy, managing its operations, and navigating the complex world of cryptocurrency trading.
Furthermore, it is essential to consider the challenges and uncertainties that come with a rapidly evolving industry like cryptocurrency. The market can be volatile, and regulatory scrutiny is ever-present. While mistakes may have been made, it is crucial to remember that hindsight is always 20/20.
Caroline Ellison deserves recognition for her achievements and for taking on the responsibilities of co-CEO at such a young age. She has shown resilience, determination, and the ability to adapt to challenging circumstances. Her journey from a mousy intern to a prominent figure in the cryptocurrency world is a testament to her talent and dedication.
As the legal battle unfolds, it is important to approach the situation with an open mind and consider all the facts. Blaming one individual for the downfall of a company is often an oversimplification of a complex situation. Caroline Ellison’s story should serve as a reminder that success and failure are rarely the result of a single person’s actions, but rather the culmination of various factors and circumstances.
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