FTX star witness Caroline Ellison lands new job after release

Caroline Ellison, the former partner of Sam Bankman-Fried and the star witness in the fraud case surrounding the bankrupt crypto platform FTX, has been released from pre-trial detention and is now working for a non-profit organisation. The CEO of the US NGO Manifund announced the news.

New York Times

Let us rewind to the crypto winter of 2022. Bitcoin had fallen more than 75% from its record high, and sentiment in the sector could hardly have been worse. The absolute low point came in November 2022, when FTX, at the time one of the largest crypto exchanges in the world, imploded within days. What had for years been portrayed as one of the most reliable and professionally run companies in the crypto sector (SBF appeared on the front page of Fortune and The New York Times several times at the time) turned out to be a financial house of cards.

At the centre of the story were Sam Bankman-Fried and Caroline Ellison. Sam was the flamboyant founder and CEO of FTX, the man who appeared at conferences in shorts and a T-shirt, raised billions from investors and presented himself as the face of “effective altruism”. Caroline Ellison was CEO of Alameda Research, the trading firm closely tied to FTX that for years held enormous positions in the crypto markets. Sam dealt in crypto, while Caroline traded stocks.

The two also had an on-off relationship. In 2020 and 2021 they got together and split up several times. In early 2022 Bankman-Fried decided to end the relationship for good. By then they were already largely living separate lives geographically. Sam ran FTX from his luxury resort in the Bahamas, while Ellison did much of her work for Alameda from Hong Kong. Their professional focus also differed: FTX was the exchange where customers parked and traded their cryptocurrencies, while Alameda was active as a trading firm in traditional financial markets.

Alameda

To the outside world, both companies appeared highly successful. Investors queued up to pour money into Bankman-Fried’s empire. Behind the scenes, the reality turned out to be far less rosy. Alameda suffered large losses and increasingly used funds that were made available through FTX. At the same time, both companies constantly filled holes in each other’s balance sheets. As long as the crypto market kept growing, that structure could hold up. When markets began to fall, however, and customers wanted their money back, it became clear that billions were missing. The result was one of the biggest financial scandals of this century.

To this day, observers debate exactly who played which role in the fraud. Was Ellison mainly an executor of decisions made elsewhere, or was she herself a co-architect of the system? And how much did Bankman-Fried really know about the daily transactions between FTX and Alameda? The court ultimately concluded that Bankman-Fried was chiefly responsible, but debate over the precise responsibilities of those involved continues.