Caroline Ellison, the government’s star witness in its fraud case against FTX founder Sam Bankman-Fried, took the stand for cross-examination on Thursday morning as the trial continued in a courthouse in downtown Manhattan.
Ellison was CEO of Bankman-Fried’s hedge fund, Alameda Research, and also dated him on and off while working with him. She pleaded guilty in December to two counts of wire fraud, two counts of conspiracy to commit wire fraud, conspiracy to commit commodities fraud, conspiracy to commit securities fraud and conspiracy to commit money laundering. Part of the 28-year-old’s plea deal with the government has involved cooperating with the prosecution’s case against Bankman-Fried.
On Thursday morning, Ellison faced aggressive questioning from Bankman-Fried’s lawyer, Mark Cohen, who spoke over her several times as she tried to testify. But Judge Lewis Kaplan also appeared annoyed at the fact that Cohen requested two sidebar conferences early on to pursue lines of questioning.
Ellison mostly avoided eye contact with the defendant, as she has during the past two days of testimony, staring down at her hands in between questions and frequently flipping her hair over her left shoulder.
Part of the cross-examination revolved around Sam Trabucco, who was Alameda’s co-CEO with Ellison from October 2021 until August 2022, months before both companies collapsed into bankruptcy as investors raced to withdraw funds from FTX amid allegations that it had used customer funds to help paper over losses at Alameda as the crypto market tanked.
Ellison testified that she and Trabucco began handling a lot of Alameda’s day-to-day business as early as 2020, well before officially taking over, and that there were periods of time where Bankman-Fried would not talk to them much. By 2021, she testified, Bankman-Fried had largely stopped coming into the Alameda office and had left more of the job to Ellison. She said that Trabucco was good under pressure and at handling extreme trading situations.
She also testified that the firm had attempted to hire several people to oversee Alameda’s accounting, but they all left and Ellison took on the role of preparing Alameda’s balance sheets from Ryan Salame, who had been the CEO of a subsidiary called FTX Digital Markets. In previous testimony, Ellison admitted that she had used FTX customer money to pay Alameda’s loans, and alleged she did so at Bankman-Fried’s suggestion.
Ellison also testified that Bankman-Fried had discussed adding a new co-CEO when Trabucco left, but she resisted.
When Cohen asked if she considered herself an ambitious person, Ellison said she didn’t think of herself as particularly ambitious, but became more so with Bankman-Fried’s encouragement as she worked for him.
Ellison’s cross-examination is likely to continue throughout Thursday morning.
