Caroline Ellison Gives Devastating Testimony Against SBF

On Tuesday and Wednesday, Caroline Ellison, former CEO of Alameda Trading, gave evidence against her former boss and on-off boyfriend, Sam Bankman-Fried. Her testimony was nothing short of damning.

Ellison has already pleaded guilty to seven counts, including wire fraud and securities fraud. She has agreed to cooperate with prosecutors in the hope of receiving a lighter sentence. They will have been pleased with her evidence, which—even at this early stage in the trial—could be set to put SBF away for decades.

"Sam Made Me Do It"

Ellison's testimony, in summary, stated that SBF told her to commit multiple crimes during her time at Alameda, the crypto hedge fund that was so closely linked to FTX as to be practically inseparable. FTX shared bank accounts with Alameda, and Alameda effectively used FTX's customer deposits as a giant slush fund, to do with as it wanted.

Here are just some of the accusations the prosecution drew from her during the two days of her testimony.

• Alameda had an unlimited line of credit from FTX. For example, SBF told Ellison to repay Alameda loans with FTX customer funds.
• At SBF's direction, Ellison defrauded Alameda's lenders by sending them balance sheets that incorrectly stated the amount of assets and liabilities, making Alameda appear less risky than it really was.
• As soon as Ellison started working for Alameda in 2018, she discovered the company had just suffered large losses, causing lenders to withdraw their money and more than half of employees to quit. SBF had not informed her of the problems before she took the job.
• Right from the outset, SBF viewed FTX as a good source of funds for Alameda to use.
• He told her not to worry about auditors; they wouldn't find out what they had done.
• $1 billion of FTX customer money was used to buy equity back from Binance.
• Alameda borrowed over $9 billion from third parties, mostly from Genesis Trading.
• SBF instructed her to sell BTC (belonging to customers) above $20,000, effectively suppressing the price. It's currently unknown why.
• SBF paid a $100 million bribe to Chinese regulators to unfreeze their assets.
• He wanted to sell equity in FTX to Saudi Crown Prince Mohammed Bin Salman as FTX was starting its final descent, effectively attempting to scam Saudi royalty.
• He encouraged US regulators to go after Binance.
• SBF told her they only had enough money to cover a third of client holdings, not 100%, as he publicly stated.
• During their entire relationship, SBF was also her boss.
• SBF told her he thought there was a 5% possibility that he would one day become US President.
• Ellison broke down on the stand, saying she was relieved she didn't have to lie any more.

Even though it's early days yet, there's a consensus it will be hard for SBF to come back from this.

No One Here Looks Good

Ellison's evidence paints SBF as a man devoid of conscience, who thought nothing of using customer funds, even when that involved serious financial risk. His actions weren't attributable to disorganization, as he might claim, but entirely deliberate. His signature disheveled look was an intentionally-crafted facade.

Neither, however, does Ellison come out of this testimony looking good. As Austism Capital notes, she comes across as a highly intelligent woman who could have done anything, but who instead was so passive that she did whatever SBF told her—following him everywhere, including to prison.

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