Three months before last year’s cryptocurrency market crash, Caroline Ellison, the 27-year-old CEO of crypto hedge fund Alameda Research, was plagued with self-doubt.
“I was feeling so sad and so confused at my job,” Ellison wrote in a Google doc in February 2022. She added, “At the end of the day, I can’t wait to go home, turn off my phone, have a drink, and just get away from it all.”
Mrs. Ellison had a lot on her mind. And she wrote in another Google document that she didn’t think she was well suited to the Alameda administration or that she was a particularly decisive leader. She was also going through a breakup with Sam Bankman-Fried, the billionaire businessman who founded Alameda and then FTX, one of the largest cryptocurrency exchanges in the world. They dated on and off, and Mrs. Ellison worried about “making things weird” and “causing drama”.
“I really don’t feel like there is an end in sight,” she wrote in the February 2022 document.
Now Ms. Ellison is preparing to be a leading witness in the criminal trial of Mr. Bankman-Fried, which is scheduled for October 2nd.
Mr. Bankman Fred, 31, is accused of misusing billions of dollars taken from customer accounts and faces eight counts of fraud and election law violations. His spectacular fall, which bankrupted FTX and Alameda, transformed Ms. Ellison from a powerful — yet relatively private — figure into a target of tabloid speculation. In December, she pleaded guilty to fraud charges and agreed to cooperate with federal prosecutors investigating her ex-boyfriend.
His case accelerates toward a Manhattan courtroom showdown. Two senior FTX executives, Nishad Singh and Gary Wang, also pleaded guilty and agreed to cooperate. In June, after weeks of legal wrangling over the charges against Mr. Bankman-Fried, the judge in the case quickly set up a timeline for trial preparation, asking prosecutors to draw up a list of witnesses and provide other final materials. Prosecutors are expected to start preparing at least some witnesses in August, two people familiar with the matter said.
As Mr. Bankman Fried’s sometime girlfriend and one of his first hires, Mrs. Ellison had a unique vision for the founder of FTX. She also recorded many of her thoughts in writing, and made notes about her personal and professional life in handwritten diaries and on Google Docs that circulated among attorneys involved in the case, according to documents reviewed by The New York Times and four people familiar with the investigation.
The documents, which have not been previously reported, provide new insight into Ms. Ellison’s psychology during the final months of FTX. Mrs. Ellison, now 28 years old, was a Prolific writer whose Tumblr posts about Harry Potter and Jane Austen have been dissected extensively. But the Google documents are more personal and raw, some of which are directed directly at Mr. Bankman-Fried, illustrating the complexity and ambivalence of their relationship with Alameda.
In a Google doc addressed to Mr. Bankman-Fried in April 2022, Ms. Ellison writes that a previous breakup with him had “significantly reduced my enthusiasm for Alameda.” She added that life at the hedge fund “felt very connected to you in an excruciating way”.
A representative of Ms. Ellison’s legal team and attorney for Mr. Bankman-Fred declined to comment. A spokesman for the US Attorney’s Office for the Southern District of New York in Manhattan, the unit prosecuting the case, also declined to comment.
Mrs. Ellison, a graduate of Stanford University, was introduced to Mr. Bankman Fred at Jane Street, the quantitative trading firm where he worked after college. They shared a commitment to effective altruism, a philanthropic movement that has gained followers in the technology and finance industries.
After Mr. Bankman Fried left Jane Street to start the Alameda Corporation in 2017, he hired Mrs. Ellison as a dealer. In 2021, it is promotion It became co-CEO, along with another early employee, Sam Trabuco.
Mr. Bankman-Fried and Mrs. Ellison also begin an uneasy romantic relationship, with many breakups and reconciliations. Sometimes Mrs. Ellison worried that Mr. Bankman-Fred thought she wasn’t good enough. When he was around, she wrote in a February 2022 Google doc, she had “an instinct to shrink, become smaller, quieter, and defer to others.”
After one defection, Mrs. Ellison breaks off contact with Mr. Bankman-Fried. “I felt so hurt/rejected,” she wrote in an April 2022 Google Doc. “Not giving you the connection you want seems like the only way I can regain a sense of power.”
By last year, Mr. Bankman-Fried had become one of the world’s most prominent crypto entrepreneurs, his face plastered on billboards and magazine covers. His fame seems to have made life at FTX and Alameda more difficult for Mrs. Ellison.
Staying put means “having to be around you all the time, hearing people talk about how amazing you are all the time,” she wrote in the April 2022 document.
Mrs. Ellison has been compensated Much less generous Other senior executives at FTX and Alameda, though it’s unclear if she was aware of this. According to court filings, the exchange’s founders and other key employees received $3.2 billion in payments and loans. Of that total, $6 million went to Ms. Ellison, compared to $587 million for Mr. Singh, FTX’s chief engineering officer, and $246 million for Mr. Wang, one of the founders. Mr. Bankman Fred received $2.2 billion.
In May 2022, the cryptocurrency market crashed, sending coins prices skyrocketing and driving several notable companies into bankruptcy. During the crisis, regulators asserted that Mr. Bankman Fried, Mr. Wang, Mr. Singh, and Ms. Ellison filled a hole in Alameda’s accounts using billions in customer funds held in FTX.
Even before that, Mrs. Ellison doubted her own abilities. In the April 2022 document, I gave a list of areas in which I struggled, including “leadership” and “decisiveness.”
“Running Alameda just doesn’t feel like me It has a comparative advantage or well-suited to do so.”
By last fall, Mr. Bankman Fred had lost faith in Alameda. He considered closing the company, according to court records, and invested more than $400 million in another trading firm, Modulo Capital, which was led by another former Jane Street trader who also had a crush on him.
Ms. Ellison expressed jealousy and resentment toward Modulu in some of her writings, as well as feeling pressured, two people who have seen the documents said.
Mr Bankman Fried’s business empire collapsed in November after an influx of deposits revealed an $8 billion deficit.
Mrs. Ellison wrote to him in a letter that month, quoted from court records: “I felt a growing dread of this day weighing upon me.” “Now that it’s already happened, it feels great to get over it.”
In December, Mr. Bankman-Fried was arrested in the Bahamas, where FTX was headquartered, and taken to a prison not far from the luxurious penthouse he and Mrs. Ellison were sharing with eight roommates, including Mr. Wang and Mr. Singh. Mr. Bankman Fried is now under house arrest at his parents’ home in Palo Alto, California.
People who knew Ms. Ellison say they were struck by her seriousness and willingness to admit her own failures. She told the court in December that she was “really sorry” for having committed fraud. “I knew it was a mistake,” she said.
Ms. Ellison is expected to repeat this assertion at Mr. Bankman-Fried’s trial, which is expected to last four or five weeks. Most of the trial will center around messages that Mr Bankman-Fried and the three collaborators exchanged on messaging app Signal, two people familiar with the matter said.
Lawyers familiar with the case said that as a woman working in the male-dominated cryptocurrency industry, Ms. Ellison may appear more sympathetic to the jury than other collaborators. in interviews last yearMr. Bankman-Fred shifted some of the blame for the crash to Alameda, saying he had little involvement in the day-to-day management of the hedge fund.
Moira Pinza, a former federal prosecutor, said the best government collaborators accepted blame on the witness stand and that the “power differential” between Ms. Ellison and Mr. Bankman-Fried could make her a compelling voice.
“This does not seem to me to be an effective strategy for the defendant to assign blame,” Ms. Pinza said. “Especially with someone who was once a romantic partner.”