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Inside Crypto’s trial of the century: Ellison’s Revelations in SBF Fraud Trial

Caroline Ellison's explosive testimony in one of the most important crypto fraud trials ever. We summarize the first day of her testimony when she shared intimate details of a relationship with SBF that was intertwined with power, politics, and billions at stake.


Bankman-Fried is in jail after being charged by the SEC in December 2022 with violating the anti-fraud provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934. The commission says he orchestrated a long-running fraud on FTX investors by

  • diverting FTX customers’ funds to his crypto hedge fund, Alameda Research LLC, without disclosure;
  • giving Alameda special treatment on FTX, including an unrestricted "line of credit" funded by platform customers and exemptions from key risk measures;
  • concealing risks tied to FTX’s exposure to Alameda’s inflated, illiquid assets like FTX-affiliated tokens;
  • Using mixed FTX funds at Alameda for undisclosed ventures, extravagant real estate purchases, and substantial political donations.

If convicted, SBF’s sentence could potentially be longer than that of Theranos founder and convicted fraudster Elizabeth Holmes, who was sentenced to 11 years in prison in November 2022. Like Bankman Fried, the SEC also charged Holmes with securities fraud. While Holmes’ frauds did not cause significant damage to the medical laboratory sector, the same cannot be said in Bankman Fried’s case, as the collapse of FTX triggered massive losses across the entire crypto industry.

October 10th has been anticipated heavily, as the trial of Sam Bankman-Fried resumed following the Columbus Day weekend. On this Tuesday, SBF’s ex-girlfriend and former CEO of Alameda Research took the stand. Her testimony has so far been revealing and sordid. Ellison’s testimony has been sourced through the Live tweeting conducted by courtroom journalist Matthew Russell of the Inner City Press.

The information summarizes Ellison’s testimony has been updated throughout the day. Court has now adjourned for the day. Updates to follow as more information feeds through over the course of the week.

Assistant United States Attorney Sassoon: How do you know the defendant?

Ellison: At Jane Street then Alameda. We dated for a couple of years.

AUSA Sassoon: Did you commit crimes?

Ellison: Fraud.

AUSA Sassoon : With others?

Ellison: Yes.

AUSA: Do you see Sam Bankman-Fried?

Ellison: He’s over there…

During her testimony, Ellison detailed the inner workings of FTX and Alameda Research. Notably:

Undisclosed Line of Credit: Ellison, backed earlier testimony by FTX co-founder Gary Wang that FTX had a line of credit where they could withdraw coins even if they didn’t have them. The size of this line of credit remained undisclosed to her. Ellison said Alameda took billions of dollars from FTX customers as told to by SBF.

Manipulation of FTT Token: The discussion around FTX’s native token, FTT, emerged as a key to how fraud was conducted. Ellison states that SBF insisted on manipulating the token’s price, especially when it dipped below a dollar. Further, in a self-erasing message to Victor Xu, an Alameda trader, Ellison expressed SBF’s displeasure about discussing FTT trading strategies with anyone else.

Misleading Balance Sheets: Ellison admitted to manipulating Alameda’s balance sheet, especially regarding the FTT token, to secure loans from Genesis, a crypto lending desk. The aim was to depict a healthier financial picture, even if it meant inflating assets.

Questionable Business Strategies: Ellison painted a picture of a company taking high risks, led by SBF’s aggressive strategies. One of the examples she gave was withdrawing coins from FTX to capitalize on higher prices on rival exchange Binance.

The Rise of the "Sam Coins": Another strategy Ellison mentioned was promoting various cryptocurrencies, dubbed "Sam coins", even if he didn’t create them all. Solana stood out as being more liquid than the other Sam coins. She noted that Alameda was a substantial holder of these coins.

A Complicated Relationship: In 2021, Ellison became co-CEO of Alameda. This promotion was parallel to the personal relationship she had with SBF. She mentioned their relationship had an on-again, off-again due to SBF’s neglect. Initially, she says, SBF said the relationship was to be kept a secret, only later concessions SBF allowing Ellison to disclose that they lived together. During her tenure, her salary was $200,000, with a substantial bonus of $20 million in 2021. Out of which, she withdrew significant amounts for investments, personal initiatives, loans to family, and charitable donations. At one point in their relationship she says SBF told her he wanted to be President of the United States.

The Power Dynamics at Alameda: Despite her title as co-CEO, Ellison says her role didn’t change substantially. She expressed feeling underqualified and that everything still went through SBF. She implies thatSBF was the dominant force, and that her position was largely symbolic, with SBF having the power to terminate her. She says SBF stood down from the Alameda leadership position for optics.

Loans and Political Contributions: Ellison revealed she was used to take out a $3.5 million loan for Alameda to invest in a gambling company because other FTX associates wished it to be registered under her name since she wasn’t officially on FTX’s books. She also says that FTX executive Ryan Salame received a whopping $35 million. Ellison highlighted the political angle of the money flow. Salame reportedly used the loan for contributions to the Republican party, while SBF himself made a notable donation of $10 million to Joe Biden, the goal being dual political access,

SBF’s View on Risk: Ellison also gave insight into SBF’s attitude towards risk. He purportedly conveyed that as long as the Expected Value (EV) was positive, risks, even significant ones, were acceptable. To most this attitude would be considered extremely risky. She says SBF attitude was along the lines of being willing to take a coin flip that could destroy the world if a winning flip could make the world twice as beneficial.

The Google Sheet

Ellison confirmed was presented with a Google Doc/sheet and that she maintained it. The Doc contained projections and scenarios given FTX/Alameda’s often precarious financial positions. An element was a "bad case scenario" sourced from SBF himself. This speculated potential losses if the value of the two intermingled firms and crypto dropped by 75-100%.

At one point when asked how she viewed making more illiquid investments when her calculations suggested that the group was in a ~US$2.8 billion hole, she said she was against them.

A Reliance on Loans

Ellison says she regularly informed SBF that Alameda was struggling to maintain its positions with Genesis, and his solution appeared to be an expansion of investments. When questioned about the potential implications of Genesis recalling loans, Ellison confirmed that they would resort to borrowing from FTX, even to the point where FTX customer deposits were not enough to pay back Genesis, evidencing the senseless nature of the entire exercise.

Leveraging the FTX brand

Ellison pointed out instances where funding for investments originated from Alameda but was publicly stated to be sourced from. FTX. This highlighted manipulating the potency and trust associated with the FTX name.

Looking ahead

The courtroom learned that Ellison would remain a focal witness, with both cross and direct examinations expected to continue another day. The next witness was identified as Zac Prince of Blockfi, a well-known figure within the crypto space. A curious point of discussion centered around a virtual witness from Ukraine. The Prosecution said it expects to rest on October 26th or 27th.

Day 2

Today, the former Alameda Research CEO and SBF’s ex-girlfriend returned to the stand with more scandalous details on the measures SBF and his team took to maintain financial positions.

Tricking Lenders
She said in May 2022, after the Luna-Terra market collapse many Alameda creditors called back loans they had given to the Algorithmic trading firm. She said that during this period SBF told her to use the FTX line of credit, and FTX user’s funds, to pay back these loans. Something which she felt was “wrong.”

Ellison also stated that SBF and her worked to trick lending firm Genesis. Genesis in 2022, asked Ellison if she could provide documentation of Alameda’s finances. Ellison says SBF and herself worried that providing accurate financials for Alameda would show that it was “risky.” Instead, the pair created a number of alternative balance sheets that used strategies like including employee’s personal holdings of crypto tokens to make Alameda’s financial position seem stronger than it actually was.

Bribes and screwing over rivals

Amongst other sordid details, Ellison revealed that a personal to-do list memo she kept had a task titled “Getting regulators to crack down on Binance.” Binance is one of the world’s largest exchanges and was a key rival of FTX.

Ellison said that other FTX executives and she “paid a large bribe to Chinese officials” to secure funds that were locked on a Chinese exchange. The Chinese exchange was being investigated for money laundering at the time, and Alameda had used it for trading. Neither FTX nor Alameda were involved with the money laundering case. The size of the bribe was revealed to be around US$150 million.

Anything to survive

A chunk of Ellison’s testiomny on day 2 focused on the desperate nature of SBF as he tried to hold on to his crumbling empire. She said there was a period when SBF considered raising equity as a way to infuse more capital into FTX. She also mentions that SBF considered Saudi Prince Mohammed bin Salman Al Saud, popularly known as MBS, for funding during the depths of the FTX/Alameda struggle. A series of chats and documents highlighted potential investors. Names such as Dustin, Sequoia, Briger, Genesis, Apollo, Mubadala, and Silverlake were thrown out as lifelines. In one of the documents it is shown that the group only had half the assets they purported to have.

Emotionally Charged Exchanges
The trial took a more personal turn whem in delved into the more side of the relantiohship between Ellison and SBF. By the summer and fall of 2022, Ellison and SBF had ended their romantic relationship, and she mentioning that because of this one-on-one meetings with him were avoided. Ellison says, however, business matters and the impending FTX/Alameda death spiral borught them face to face.

An encounter occurred in an apartment study was noted, where a heated argument led to SBF pinning the blame on Ellison for not hedging, and he accused for the company having to borrow US$10 billion. Ellison, emotionally affected by these accusations, pushed back and it was SBF’s aggressive investment strategies that led them to this precarious position. Ellison discusses hedging during her testimony.

Another chat indicated the duo’s increasing desperation as liquid assets dwindled down to $1 to $2 billion. Ellison admitted she suffered through mood swings and expressed relief, when everything was out in the open because that she no longer felt the need to lie, she notably teared up after saying this.

At one point when Ellison texted SBF that she grappling with mood swings, SBF’s attempt at consolation came in the form of a message saying "Wow, congrats? cuz shit is exciting?"

Surge in Withdrawals
Ellison confirmed that as the FTX/Alameda began to rapidly deterioate she began preserving messages exchanges she had with SBF and Nishad Singh, FTX’s CTO. A message from Singh revealed that FTX withdrawals were averaging an alarming $120 million an hour. Ellison in response, sent him just a sad face emoticon, which she said was down to pure fear.

Fears Over Meeting Withdrawals
Facing the withdrawal surge, Ellison says she voiced concern about FTX’s ability to meet requests as did other team members like Ryan Salame.

Confronted with tweets she wrote that related to the FTX financial position, Ellison confirmed that many were misleading. The tweets painted a rosy picture of delays due to anti-spam and nodes, when in reality, they lacked the funds. The tweets being collaboratively crafted by Sam, Gary, Nishad, and Ellison, who reluctantly recast them in her words.

Binance’s Counter-Tweets
To compound the pressure, CZ of Binance openly tweeted about liquidating any FTT on their books. In response, Ellison says on SBF’s advice, she fired back, challenging CZ’s intentions and attempting to call his bluff.

Concealed from the audit

Ellison said that $1.6 billion that was allegedly concealed from auditors during the FTX audit. Ellison identified Nishad Singh as the person who might have shared this information with her.

The Cooperation Agreement
At one point the prosecution presented Ellison with her Cooperation agreement with the government which she acknowldged. She confirmed that her obligations under the deal required her to tell the truth and in return, the government would provide a letter to the judge detailing her crimes and the extent of her cooperation.

Cross Examination
The defence briefly cross examined Ellison towards the end of the day. Their questioning around “FTX underscore fiat” seemed to confuse both Ellison and Judge Kaplan and this ended proceedings with Ellison for the day.

Post-Trial Discussions
After the jury and Ellison left the courtroom, there was a brief discussion around FTX’s investment into AI start-up Anthropic. While the prosecution felt its post-collapse performance was irrelevant, SBF’s lawyer highlighted its remarkable growth of the investment from a $91 million investment to a value of $1 billion.


The courtroom drama has so far offered a potentially ominous look into the inner workings of a large crypto company. As the defense prepares to cross-examine, the crypto and financial world awaits further revelations.


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