Caroline Ellison, Adviser to Sam Bankman-Fried, Says He ‘Directed’ Her to Commit Crimes

Caroline Ellison, a close adviser and former girlfriend of the disgraced cryptocurrency mogul Sam Bankman-Fried, said on Tuesday that she conspired with him to steal billions of dollars from customers of his exchange, FTX.

Ms. Ellison took the witness stand in front of a packed room at the federal courthouse in Manhattan, where Mr. Bankman-Fried is standing trial for fraud and conspiracy charges related to the collapse of FTX. When a prosecutor asked her to identify Mr. Bankman-Fried in the courtroom, she took more than 10 seconds to respond. Then she said several times that he had “directed” her to misuse FTX customer money.

In 15 minutes of initial testimony, Ms. Ellison said Mr. Bankman-Fried told her to use FTX customer deposits to fund investments and loan repayments by Alameda Research, a trading platform that she ran for him. She said the trading firm borrowed around $14 billion, only some of which it was able to repay.

“He directed me to commit these crimes,” Ms. Ellison, 28, said.

Ms. Ellison is the government’s star witness in Mr. Bankman-Fried’s trial — and by far his most widely discussed associate.

She is regarded as a chief accomplice to Mr. Bankman-Fried, 31, who became a symbol of hubris and dangerous risk-taking across the cryptocurrency industry after he was charged last year with masterminding a sweeping conspiracy to steal billions of dollars in deposits from FTX’s customers. She also dated Mr. Bankman-Fried on and off, giving her unique access to the FTX founder.

In December, Ms. Ellison pleaded guilty to fraud after FTX’s collapse. She joined two other former FTX executives — Gary Wang and Nishad Singh — in agreeing to cooperate with the prosecutors pursuing Mr. Bankman-Fried. A fourth former top executive, Ryan Salame, also has pleaded guilty but is not cooperating with the authorities.

Mr. Bankman-Fried has pleaded not guilty. He could receive what would amount to a life sentence if convicted.

As the investigation into Mr. Bankman-Fried unfolded over the past year, he has turned Ms. Ellison into an important element of his defense. He has argued that she ignored his instructions and made mistakes in managing Alameda that contributed to FTX’s failure.

A few weeks before the trial, Mr. Bankman-Fried had his bail revoked and was sent to jail after a judge ruled that he had tried to intimidate Ms. Ellison by leaking her private writings to The New York Times.

In her testimony on Tuesday, Ms. Ellison briefly explained her history with Mr. Bankman-Fried. The pair met at the high frequency trading firm Jane Street, where Mr. Bankman-Fried worked as a trader after college. They bonded over a shared commitment to effective altruism, a philanthropic movement popular in tech circles, and eventually became romantically involved.

In 2018, Ms. Ellison joined Mr. Bankman-Fried at Alameda, where she worked as a trader and was then promoted to chief executive. After Mr. Bankman-Fried moved Alameda to the Bahamas, he and Ms. Ellison lived together in a luxurious penthouse, along with eight other friends and executives, including Mr. Wang and Mr. Singh.

Ms. Ellison was often unhappy. She was anxious about her relationship with Mr. Bankman-Fried, and feared that she wasn’t qualified to run a company as complex as Alameda.

“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 wrote to Mr. Bankman-Fried in February 2022, in one of the private notes obtained by The Times.

This is a developing news story. Stay tuned for updates.