How Sam Bankman-Fried’s ex-girlfriend and early recruit helped put the FTX founder behind bars for 25 years
Caroline Ellison, former chief executive officer of Alameda Research LLC, center, arrives at court in New York, US, on Tuesday, Oct. 10, 2023.
Yuki Iwamura | Bloomberg | Getty Images
In sentencing FTX founder Sam Bankman-Fried to a 25-year prison sentence on Thursday, Judge Lewis Kaplan cited testimony from Caroline Ellison, an ex-girlfriend of the defendant and early recruit into his crypto enterprise.
“I keep coming back to Ms. Ellison’s testimony that he knew it was wrong,” Kaplan said at the sentencing hearing in downtown Manhattan. “He knew it was criminal.”
Ellison was the star witness for the Department of Justice in its prosecution of Bankman-Fried. She agreed to a plea deal in December 2022, a month after FTX spiraled into bankruptcy.
As part of her testimony at the criminal trial late last year, Ellison supplied the government and the jury with text messages, documents and secret recordings that ultimately helped lead to Bankman-Fried’s conviction on all seven charges against him.
Manhattan U.S. Attorney Damian Williams said in a statement after the sentencing on Thursday that Bankman-Fried’s “deliberate and ongoing lies demonstrated a brazen disregard for his customers’ expectations and disrespect for the rule of law, all so that he could secretly use his customers’ money to expand his own power and influence.”
Ellison, who ran FTX’s sister hedge fund Alameda Research, pleaded guilty 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.
Though Ellison faces similar sentencing guidelines to Bankman-Fried, she’s expected to receive a far more lenient sentence due to her role as a cooperating witness.
Caroline Ellison is questioned as Sam Bankman-Fried watches during his fraud trial before U.S. District Judge Lewis Kaplan over the collapse of FTX, the bankrupt cryptocurrency exchange, at Federal Court in New York City, October 11, 2023 in this courtroom sketch.
Jane Rosenberg | Reuters
Ellison’s complicated ties to SBF
Ellison jumped into Bankman-Fried’s crypto orbit in 2017.
She’d been working as a trader at Jane Street, where Bankman-Fried got his start in finance. Bankman-Fried had reportedly convinced the Stanford graduate to ditch her Wall Street gig and join Alameda, when the hedge fund was still in its original Bay Area office.
Ellison spent years as Bankman-Fried’s on-again, off-again girlfriend and, at times, his roommate. She followed Bankman-Fried from California to Hong Kong and ultimately to the Bahamas, as Bankman-Fried repeatedly shifted headquarters for his crypto companies.
Michael Lewis wrote about Ellison in his book, “Going Infinite,” which covered Bankman-Fried’s rise and fall. In 2021, Ellison was promoted to CEO of Alameda, a job for which, according to Lewis’s reporting, neither Ellison nor Bankman-Fried found her particularly well suited.
“Caroline sensed that, even as Sam promoted her to CEO of Alameda Research, he disapproved of her job performance — and she shared his opinion,” Lewis wrote.
Lewis shared an excerpt from one of the memos that Ellison had sent Bankman-Fried. “It feels like I’m doing a much worse job managing Alameda than you would if you were working on it full-time,” she wrote.
In April 2021, Ellison tweeted about “regular amphetamine use” in a thread that also talked about the “herculean” effort it took for her to get off of her couch and go for a hike.
Court filings show that Ellison’s compensation paled in comparison to other top executives. Of the $3.2 billion in payouts to the exchange’s founders and other senior employees, FTX’s head of engineering, Nishad Singh, received $587 million, co-founder Gary Wang got $246 million and $2.2 billion went to Bankman-Fried. Ellison received $6 million.
Some of Ellison’s private diary entries were leaked by Bankman-Fried to The New York Times, which published a report about them last July, months before the trial. The act ultimately landed Bankman-Fried back in jail after Kaplan revoked his bail for alleged witness tampering.
In a Google document from February 2022 shared with the Times, Ellison wrote, “I have been feeling pretty unhappy and overwhelmed with my job. … At the end of the day I can’t wait to go home and turn off my phone and have a drink and get away from it all.”
She added, “It doesn’t really feel like there’s an end in sight.”
‘Trying to fix problems’
But it was in the courtroom that jurors got to hear Ellison for the first time.
U.S. Attorney Thane Rehn said during the trial that Bankman-Fried “was using her as a front” when “in reality, he was still calling the shots at Alameda.” Over the course of her multi-day testimony, Ellison helped prosecutors build a narrative that she was acting at the direction of Bankman-Fried in helping him steal customer money from FTX and using it to help prop up Alameda, which was suffering in the wake of the crypto winter.
Ellison said Bankman-Fried was still CEO of Alameda when the funneling of money began. She said she was under the impression that it was FTX customer money because the sums exceeded the exchange’s profits and the amount of capital it had raised.
In mid-2021, when FTX bought equity in the company back from rival exchange and early investor Binance, FTX used $1 billion in customer funds for the transaction, Ellison testified.
Ellison said she considered resigning from Alameda at various points from 2019 to November 2022.
On one of her Google Docs, Ellison had a section entitled “limiting factors in scaling,” which she said referred to things that were holding back Alameda. The first thing she listed was management, including a comment on her former co-CEO Sam Trabucco.
“I feel like neither Trabucco nor I has been doing a great job of pushing on stuff,” she wrote. “We’re in the mode of maintaining status quo and trying to fix problems.”
In terms of the commingling of operations between FTX and Alameda, Ellison admitted on the witness stand that the two firms didn’t have a proper “Chinese wall” separating the businesses.
During her testimony, Ellison mostly avoided eye contact with Bankman-Fried, staring down at her hands between questions and frequently flipping her hair over her left shoulder. Bankman-Fried also often looked away, with hands clenched.
Ellison told the jury that her breakup with Bankman-Fried in the spring of 2022 affected communications between the two of them. They would talk mostly over Signal despite living in the same apartment, and they largely avoided each other outside of work.
Danielle Sassoon, the assistant U.S. attorney representing the government, told Kaplan several times “the defendant has laughed, visibly shaken his head, and scoffed,” which she said could be having an effect on Ellison “given the history of this relationship, the prior attempts to intimidate her, the power dynamic, their romantic relationship.”
Caroline Ellison, former chief executive officer of Alameda Research LLC, arrives to court in New York, US, on Thursday, Oct. 12, 2023.
Bloomberg | Bloomberg | Getty Images
Secret recordings and texts
Of the hundreds of items entered into evidence during the trial, a bank of messages on encrypted app Signal was among the most calamitous for Bankman-Fried.
The government presented a series of Signal exchanges involving Bankman-Fried, Ellison, Wang and other top execs. In one such exchange, from Nov. 8, 2022, Ellison appealed to Bankman-Fried and other members of the inner circle, asking for help on optics and public messaging.
Prosecutors relied heavily on text messages sent among FTX and Alameda Research executives in the case against Sam Bankman-Fried.
Source: SDNY
She wrote, “multiple people internally asking me whether they should continue to make statements to external parties like ‘Alameda is solvent.’ should i suggest they stall instead? just stall on responding to their messages? or what?”
That day, FTX issued a pause on all customer withdrawals.
The following day, Ellison again looked to the group for guidance about how to handle an all-hands meeting for Alameda’s roughly 30 employees.
Ellison’s proposal was to tell them, “Alameda is probably going to wind down” and that there was “no pressure” to stay but help with “stuff like making sure our lenders get paid” would be “super appreciated.”
Bankman-Fried suggested she say something about there “being a future of some sort for those who are excited.”
Prosecutors relied heavily on text messages sent among FTX and Alameda Research executives in the case against Sam Bankman-Fried.
Source: SDNY
Ellison ended up divulging a lot more than that in the staff meeting, a secret recording of which was played for the jury.
“Alameda borrowed a bunch of money,” which it used to make investments, Ellison said at the meeting. But as crypto prices fell, “FTX had a shortfall of user funds” and then “users started withdrawing their funds” and they “realized they would not be able to continue.”
When she was asked by a staffer whose idea it was to plug Alameda’s loan losses with FTX customer money, she said, “Um, Sam, I guess,” and giggled.
“FTX basically always allowed Alameda to, like, borrow user funds, as far as I know,” Ellison said.
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AI and Crypto Czar David Sacks speaks with President Donald J Trump as he signs executive orders in the Oval Office at the White House on Jan. 23, 2025 in Washington, DC.
Jabin Botsford | The Washington Post | Getty Images
As David Sacks, the newly appointed White House AI and crypto czar, collaborates with lawmakers on potential regulations for digital assets, one of the first things they’ll be focused on is stablecoins.
“They are very committed to moving legislation through the House and the Senate this year in order to provide that clear regulatory framework that the digital assets ecosystem needs to sustain innovation in the United States,” Sacks said on CNBC’s “Closing Bell Over Time” on Tuesday. “Moving legislation through Congress takes time, but I think this is something we could do in the next six months.”
Earlier in the day, Sacks joined leaders of the House and Senate committees for banking and finance for a press conference to talk about their early objectives for crypto policy, with the help of the SEC. It was part of a busy day in Washington for regulators and key players on Capitol Hill and in Trump’s White House to announce next steps in their digital currency plans.
“I look forward to working with each of you in creating a golden age in digital assets,” Sacks said at the press event.
He was flanked by Sen. Tim Scott (R-S.C.), chairman of the Senate Banking committee, Rep. French Hill (R-Ark.), chair of the House Financial Services Committee, and Sen. John Boozman (R-Ark.), who heads the Senate Agriculture Committee.
The leaders said their first priority is supporting a stablecoin bill introduced by Sen. Bill Hagerty (R-Tenn.), who has proposed new rules for stablecoins to create a “clear regulatory framework” for their use. Stablecoins are a type of cryptocurrency whose value is pegged to a real-world asset, such as the U.S. dollar.
Stablecoins have been gaining popularity but mostly overseas. Lawmakers are now promoting U.S.-based stablecoin issuance, reinforcing the dollar’s dominance through digital finance. Supporters like Sacks say such a move could drive trillions of dollars in new demand for the dollar and help lower long-term interest rates.
David Sacks, U.S. President Donald Trump’s AI and Crypto Czar, listens to President Trump signs a series of executive orders in the Oval Office of the White House on January 23, 2025 in Washington, DC.
Anna Moneymaker | Getty Images
Sacks on Tuesday told CNBC that a top agenda item for his new task force is evaluating “the feasibility of a bitcoin reserve,” an idea President Donald Trump suggested during his campaign. Sacks noted that the president asked his digital assets working group to study “whether it’s feasible to create either a bitcoin reserve or some sort of digital asset stockpile.” He clarified that they “haven’t committed yet to doing it, but it’s one of the first things” they’ll be considering.
Also on Tuesday, the SEC made a major shift in its approach to digital asset regulation. Under new leadership, the agency announced it would open its doors to meetings with anyone interested in discussing crypto, an effort to show a clear contrast to former SEC Chair Gary Gensler, who emerged as an antagonist to the industry.
SEC Commissioner Hester Peirce, now leading the agency’s newly established Crypto Task Force, published a statement titled The Journey Begins. She said the idea is to create more transparent and predictable regulations, removing legal ambiguity and unnecessary roadblocks.
“The Task Force is working to help create a regulatory framework that both achieves the Commission’s important regulatory objectives — including protecting investors — and preserves industry’s ability to offer products and services,” Peirce wrote.
Priorities include clarifying which crypto assets fall under securities laws, crafting a path for token issuers to gain regulatory approval and ensuring compliance measures don’t stifle innovation. The group will also examine crypto lending, staking, exchange-traded products, and cross-border regulations. Peirce stressed that while the SEC aims to foster industry growth, it will not tolerate fraud.
The SEC said it’s actively soliciting input from the public. Firms and individuals can submit written feedback or request meetings with the task force.
Tuesday’s press conference was the first major policy event led by Sacks, who was named to the post in December. While he lacks direct control over regulatory agencies or congressional funding, Sacks’ close ties to the White House and Elon Musk have positioned him as a key figure in the administration.
In June, Sacks, previously a Trump critic, hosted a fundraiser at his Pacific Heights mansion that raised $12 million for the Republican leader’s presidential campaign.
Sacks was in Washington, D.C., for the inauguration last month and attended the Crypto Ball, surrounded by industry leaders and policymakers. He declared at the event that, “The war on crypto is over.” During Trump’s first week in office, Sacks stood alongside the president in the Oval Office as he signed an executive order on digital assets.
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