Updated Oct 12, 2023 - Economy

FTX's Sam Bankman-Fried was a no-good, very bad ex

Caroline Ellison. Photo: Yuki Iwamura/Bloomberg via Getty Images

Anyone can relate to having a terrible ex, the one with the dimples and all the red flags.

Driving the news: Caroline Ellison is driving that story home at the trial of her ex-boyfriend and former boss Sam Bankman Fried, facing the possibility of her own 110-year prison sentence after pleading guilty to seven counts of fraud and conspiracy.

The big picture: That Ellison and other cooperating witnesses committed crimes at the behest of their former boss is what the prosecution's case against the former FTX chief is all about.

  • But Ellison's bad ex might make what she's saying even more compelling.

Zoom in: Ellison, now 28, said she felt like "an unequal partner" in her personal relationship with Bankman Fried, and Ellison's account of the collapse of the FTX crypto exchange and sister hedge fund Alameda Research shows how that inequity extended to their professional lives.

  • Wednesday, Ellison choked up while reading old messages between herself and Bankman Fried, the man many know simply as SBF.
  • During her testimony a day earlier, she said SBF "was my boss at work" for the entirety of their on-and-off again relationship — one they kept secret, initially.
  • "There was a general theme that I sort of wanted more from our relationship but often felt like he was distant or not paying attention to me," she said.

The parallel: Their working relationship would get there as well, with Ellison saying that SBF sought to distance FTX and himself from his hedge fund Alameda Research — which he had tapped Ellison to lead — as their alleged fraud came to light last fall.

  • One entity used the other until there was nothing left. And that power dynamic plays out between her and Bankman Fried as well, according to Ellison.

Flashback: A month before Ellison became co-CEO of Alameda in October 2021, she was SBF's girlfriend again. But it wouldn't be long before they broke up — again — and at his behest, she would lie, cheat and steal as a company officer, according to her side of the story.

  • Ellison said that SBF directed her to fake balance sheets last summer and send them to lenders.

Meanwhile, as Alameda's debts ballooned, SBF blamed Ellison, she said.

  • In August 2022: "Sam started saying that he thought Alameda should have hedged way more earlier in the year and that it was a big mistake and that it was my fault and that I was largely responsible for the financial situation that Alameda had ended up in."

Fast forward to yesterday. Prosecutor Danielle Sassoon took note of SBF's reactions to Ellison's testimony, telling Judge Lewis Kaplan in a sidebar:

  • "Your Honor, given where I'm standing, I've noticed several times since the lunch break that in response to things the witness has said, the defendant has laughed, visibly shaken his head, and scoffed."
  • Kaplan says he wasn't looking and didn't see that happen, but encouraged SBF's lawyer to speak with him.

Quick take: Ellison could pass for a legal clerk, sitting on the witness stand in her white shirt, gray blazer, black skirt, and tights — her voice wobbles as she reads a chat between her and SBF per prosecutors' request.

  • Around Nov. 7 — just as FTX customer withdrawals were surging — Ellison messaged SBF saying she was in the "best mood," and also said, "If things got worse, I don't think I am going to handle it well."
  • Sassoon asked, "Why are you saying that this is the best mood you've been in in a year?"
  • Ellison: "To be clear, that was overall the worst week of my life." She starts to cry and describes how several months of dread turned to "a sense of relief that I didn't have to lie anymore."

The bottom line: Why did Ellison share this with the defendant, Sassoon asked.

  • "Because I didn't feel like there was anyone else I could talk to," she said.

Go deeper: FTX tried a lawyer, Thai prostitutes and finally a bribe to get frozen funds unlocked, witness says

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