February 29, 2024

Three months before the cryptocurrency market crashed last year, Caroline Ellison, the 27-year-old chief executive of crypto hedge fund Alameda Research, was plagued by self-doubt.

“I’ve been feeling very unhappy and overwhelmed with my job,” Ms. Ellison wrote in a February 2022 Google filing. “At the end of the day, I can’t wait to go home and turn off my phone, get a drink and get away from it all,” she added.

Ms. Ellison has a lot on her mind. She wrote in another Google document that she didn’t think she was well suited to run Alameda or would be particularly assertive as a leader. She also split with Sam Bankman-Fried, the billionaire entrepreneur who founded Alameda and later FTX, one of the world’s largest cryptocurrency exchanges. They dated on and off and Ms Ellison worried about “making things weird” and “causing drama”.

“The feeling is not over yet,” she wrote in the February 2022 filing.

Ms. Ellison will now be the star witness in Mr. Bankman-Fried’s criminal trial scheduled for October 2.

Bankman-Fried, 31, is accused of misusing billions of dollars withdrawn from client accounts and faces eight counts of fraud and election law violations. His fiasco led to the bankruptcy of FTX and Alameda, and Ms. Ellison went from a powerful but relatively private figure to 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 is racing to a showdown in a Manhattan courtroom. Two other FTX executives, Nishad Singh and Gary Wang, have also pleaded guilty and agreed to cooperate. In June, after weeks of legal wrangling over the charges against Bankman-Fried, the judge in the case set a fast-track timetable for preparations for the trial, ordering prosecutors to produce a witness list and other final materials. Prosecutors are expected to begin preparing at least some witnesses in August, two of the people said.

As Mr. Bankman-Fried’s ex-girlfriend and one of his earliest hires, Ms. Ellison has a unique perspective on the FTX founder. She also recorded many of her thoughts in writing, observing her personal and professional life in handwritten diaries and Google documents circulated among the lawyers involved, according to documents reviewed by The New York Times and four people familiar with the matter. investigation.

The previously unreported documents offer new insight into the psychology of Ms. Ellison’s final months at FTX.Ms. Allison is 28 years old and a prolific writer Her Tumblr posts about Harry Potter and Jane Austen have been widely dissected. But Google’s documents are much more personal and raw, some of them written directly to Mr. Bankman-Fried, illustrating the complexity of their relationship and her ambivalence about Alameda.

In a Google document to Bankman-Fried in April 2022, Ms. Ellison wrote that the earlier breakup with him “significantly reduced my excitement about Alameda.” Life at a hedge fund, she added, “feels so connected to you that it’s painful.”

A representative for Ms. Ellison’s legal team and an attorney for Mr. Bankman-Fried declined to comment. A spokesman for the Manhattan U.S. Attorney’s Office for the Southern District of New York, which is prosecuting the case, also declined to comment.

Ellison, a graduate of Stanford University, met Mr. Bankman-Fried at the quantitative trading firm Jane Street, where she worked after graduation. Together, they are committed to effective altruism, a philanthropic movement that has gained followers in the tech and financial industries.

After Mr Bankman-Fried left Jane Street to start Alameda in 2017, he recruited Ms Ellison as a trader. In 2021, he promotion She serves as co-CEO along with another early hire, Sam Trabucco.

Mr Bankman-Fried and Ms Ellison also began an erratic relationship, breaking up and reconciling multiple times. At times, Ms. Ellison worried that Mr. Bankman-Fried thought she wasn’t good enough. She wrote in a February 2022 Google filing that when he was around, she “had an instinct to shrink herself, become smaller, quieter, and submissive to others.”

Ms. Ellison cut ties with Mr. Bankman-Fried after a breakup. “I feel very hurt/rejected,” she wrote in an April 2022 Google filing. “Not giving you the feeling of connection you want is the only way for me to regain my sense of empowerment.”

By last year, Mr. Bankman-Fried had become one of the world’s most famous cryptocurrency entrepreneurs, with his face on billboards and magazine covers. His fame seems to be making life harder for Ms. Ellison at FTX and Alameda.

She wrote in the April 2022 filing that staying put meant “having to be by your side all the time and hearing people talk about how great you are.”

Ms Ellison was compensated far less generous Higher than other executives at FTX and Alameda, though it’s not clear she was aware of that. The exchange’s founders and other key employees received $3.2 billion in payments and loans, according to court documents. Among them, Ms. Ellison received $6 million, while Mr. Singh, FTX engineering director, received $587 million, and Mr. Wang, one of the founders, received $246 million. Mr. Bankman-Fried received $2.2 billion.

In May 2022, the cryptocurrency market crashed, causing token prices to skyrocket and sending several high-profile companies into bankruptcy. During the crisis, Bankman-Fried, Mr. Wang, Mr. Singer and Ms. Ellison used billions of client funds deposited into FTX to plug holes in Alameda accounts, the regulator alleges.

Even before that, Ms. Ellison doubted her abilities. In the April 2022 filing, she listed areas where she struggled, including “leadership” and “decisiveness.”

“Running the Alameda is not like me Relatively advantageous or well suited to do so,” she wrote.

By last fall, Mr. Bankman-Fried had lost faith in Alameda. He considered closing the firm and invested more than $400 million in another trading firm, Modulo Capital, led by another former Jane Street trader with whom he also dated, according to court records.

In some of her writing, Ellison expressed envy and resentment for Modulo, as well as a sense of being excluded, according to two people who have reviewed the documents.

Mr Bankman-Fried’s business empire collapsed in November as a run on deposits led to an $8 billion deficit.

“I just grew dreading the day and it was stressing me out,” Ms. Ellison wrote in a letter to him that month, excerpted from court records. “Now that it’s actually happening, it feels great to end it.”

Bankman-Fried was arrested in December in the Bahamas, where FTX is based, and taken to a prison not far from the luxury penthouse he and Ms. Ellison shared with eight other roommates, including Mr. Wang and Mr. Singer. Mr. Bankman-Fried is currently under house arrest at his parents’ home in Palo Alto, California.

People who knew Ms Ellison said they were struck by her sincerity and willingness to admit her shortcomings. In December, she told the court she was “deeply sorry” for her fraud. “I knew it was wrong,” she said.

Ms Ellison is expected to repeat the claim during Mr Bankman-Fried’s trial, which will last four to five weeks. Much of the trial will revolve around messages exchanged by Bankman-Fried and three collaborators on the messaging app Signal, two people familiar with the matter said.

As a woman in the male-dominated cryptocurrency industry, Ms. Ellison may have been more sympathetic to the jury than her other collaborators, lawyers familiar with the case said.interviewing last yearBankman Fried blamed part of the collapse on Alameda, saying he had little involvement in the day-to-day management of the hedge fund.

Former federal prosecutor Moira Penza said the best government collaborators had taken the blame on the witness stand and that the “difference of power” between Ms Ellison and Mr Bankman-Fried could give her a convincing voice.

“In my view, this is not an effective strategy for blaming the accused,” Ms Pensa said. “Especially for someone who has been a romantic partner.”

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