By David Yaffe-Bellany, Matthew Go / Source: https://www.nytimes.com/2023/07/20/technology/ftx-caroline-e
Compilation: Luffy, Foresight News
In the months leading up to the SBF trial (October 2 of this year), the SBF leaked to the New York Times some of the private documents of Caroline Ellison (a key witness in the case, ex-girlfriend of SBF, ex-CEO of Alameda). U.S. prosecutors said the SBF's move was to discredit witnesses and limit their testimony in court. The New York Times published an article about Caroline Ellison's private papers, focusing on Caroline Ellison's relationship with SBF and internal conflicts at work in Alameda . Foresight News compiled and compiled the article as follows:
Three months before last year's cryptocurrency market crash, Caroline Ellison, the 27-year-old CEO of crypto hedge fund Alameda Research, was plagued by self-doubt.
“I’ve been feeling very unhappy and overwhelmed with my job,” Ellison wrote in a February 2022 Google filing. She added: “At the end of the day, I can’t wait to go home and turn off my phone, grab a glass of wine and get away from it all.”
Ellison has a lot on her mind. She wrote in another Google filing that she didn't think she was well suited to run Alameda, especially as a decision maker. She also had a bad relationship with Sam Bankman-Fried (SBF), the then-billionaire entrepreneur who founded Alameda and later FTX, one of the largest cryptocurrency trading platforms in the world. They dated on and off but ended up breaking up, mostly because Ellison worried about "making things weird at work" or "bringing negative repercussions."
“It feels like there is no end in sight,” she wrote in the February 2022 filing.
Ellison will now appear as a witness in Sam Bankman-Fried's criminal trial scheduled for Oct. 2.
SBF, 31, is accused of misusing billions of dollars of client assets and faces eight counts of fraud and election law violations. His downfall led to the bankruptcy of FTX and Alameda, and Ellison went from a powerful but relatively hidden figure to a star of gossip. In December, she pleaded guilty to fraud charges and agreed to cooperate with federal prosecutors investigating her ex-boyfriend.
SBF's case is about to go to final judgment in a Manhattan courtroom. Two other FTX executives, Nishad Singh and Gary Wang, have also pleaded guilty and agreed to cooperate. In June, after weeks of legal wrangling over SBF's charges, the judge in the case set a fast-track timetable for the run-up to the trial, ordering prosecutors to provide a witness list and other final submissions. Prosecutors are expected to begin contacting more witnesses in August, two people familiar with the matter said.
As SBF's ex-girlfriend and one of his earliest partners, Ellison has a unique perspective on the FTX founder. Ellison wrote down many of her thoughts, observing her personal and professional life in handwritten diaries and Google Docs, according to The New York Times and four people familiar with the matter who reviewed Ellison's files. The documents were widely circulated among lawyers involved in the case.
The previously unreported documents shed new light on Ellison's mental state and changes during his final months at FTX. Ellison, 28, is a prolific writer who has been widely criticized for her Tumblr posts about Harry Potter and Jane Austen. But the more intimate Google documents, some of which were written directly to SBF, illustrate the complexity of their relationship and her ambivalence toward Alameda.
In a Google document to SBF dated April 2022, Ellison wrote that the earlier breakup with him "significantly dampened my excitement about Alameda." She added that life at a hedge fund "feels so connected to you that it's painful."
A representative for Ellison's legal team and an attorney for SBF declined to comment. A spokesman for the Manhattan U.S. Attorney's Office for the Southern District of New York, which is prosecuting the case, also declined to comment.
Ellison is a graduate of Stanford University, and she met SBF at the quantitative trading firm Jane Street where she worked after graduation. Their shared commitment to effective altruism has attracted a following in the tech and financial industries.
After SBF left Jane Street to start Alameda in 2017, he recruited Ellison as a trader. In 2021, he promoted her to co-CEO alongside another early hire, Sam Trabucco.
Meanwhile, SBF and Ellison also began a volatile relationship, breaking up and reconciling multiple times. Sometimes, Ellison worries that the SBF doesn't think she's good enough. She wrote in a February 2022 Google filing that when he was around, she "had an instinct to cringe, become quieter, and defer to others."
After a breakup, Ellison cut ties with SBF. "I am deeply saddened," she wrote in an April 2022 Google filing. "Not being in touch with you is the only way for me to regain my sense of power."
Alameda and FTX founder Sam Bankman-Fried in his Hong Kong office in 2021
As of last year, SBF has become one of the most famous cryptocurrency entrepreneurs in the world, with his picture regularly appearing on billboards and magazine covers. His fame seems to be making life harder for Ellison at FTX and Alameda.
She wrote in the April 2022 filing that staying in Alameda meant "having to be by your side all the time, hearing people talk about how great you are all the time."
Ellison's pay is far less lucrative than other executives at FTX and Alameda , though it's unclear whether she realizes this. The exchange's founders and other key employees received $3.2 billion in payments and loans, according to court documents. Among them, Ellison received $6 million, while Mr. Singh, director of FTX engineering, received $587 million, and Mr. Wang, one of the founders, received $246 million. SBF received $2.2 billion.
In May 2022, the cryptocurrency market crashed, sending several well-known companies into bankruptcy. During the crisis, SBF, Mr. Wang, Mr. Singh and Ellison used billions of client funds deposited into FTX to plug holes in Alameda accounts, the regulator alleges.
Even before that, Ellison doubted his abilities. In the April 2022 document, she listed her difficulties, including "leadership" and "decision-making."
“ Running Alameda didn’t feel like something I was relatively well-placed or suited to do ,” she wrote.
By last fall, the SBF had lost faith in Alameda. He considered closing the firm and invested more than $400 million in another trading firm, Modulo Capital, led by another former Jane Street trader whom SBF had met, according to court records.
In some of her writings, Ellison expressed envy and resentment for Modulo, as well as a sense of being excluded, according to two people who have seen Ellison's papers.
SBF's business empire collapsed in November as a deposit run exposed an $8 billion deficit.
“I just grew more and more dreading this day, and it was overwhelming,” Ellison wrote in a letter to him that month, excerpted from court records. "Now that it's actually happening, it feels good to end it."
In December, SBF was arrested in the Bahamas, where FTX is headquartered, and taken to a jail not far from his luxury apartment. Previously, SBF, he shared the luxury penthouse with Ellison and eight other flatmates. SBF is currently under house arrest at his parents' home in Palo Alto, California.
People who knew Ellison said they were shocked by her candor in acknowledging her shortcomings. In December, she told court she was "deeply sorry" for her fraud. "I know it's wrong," she said.
Ellison is expected to repeat that claim during the SBF trial, which will last four to five weeks. Much of the trial will revolve around messages sent by SBF and three collaborators on the messaging app Signal, two people familiar with the matter said.
As a woman in the male-dominated cryptocurrency industry, Ellison may have an easier time gaining jury sympathy than other collaborators, attorneys familiar with the case said. In an interview last year, SBF blamed some of the blame for FTX's collapse on Alameda, saying he had little involvement in Alameda's day-to-day management.
Former federal prosecutor Moira Penza said the "difference of power" between Ellison and the SBF could give her a convincing voice. "But in my opinion, it's not necessarily a good thing for the defendant," Penza said, "especially for the behavior (to use) the other party (to get away with) who had a close relationship."
