Caroline Ellison takes stand at Sam Bankman-Fried's fraud trial

By Luc Cohen and Jody Godoy

NEW YORK (Reuters) -Caroline Ellison, the previous chief govt officer of Sam Bankman-Fried’s hedge fund, took the stand on Tuesday because the star witness within the former crypto mogul’s fraud trial.

Ellison, who was additionally as soon as Bankman-Fried’s romantic companion, is one among three former members of the 31-year-old former billionaire’s internal circle who’ve pleaded responsible to fraud fees and agreed to cooperate with the Manhattan U.S. Lawyer’s workplace. 

Prosecutors are prone to ask Ellison about her private relationship with Bankman-Fried. They may also search particulars on their allegations that the ex-mogul’s Alameda Analysis hedge fund, which was run by Ellison, was used to steal billions of {dollars} in deposits from prospects at his FTX cryptocurrency trade.

Prosecutors say Bankman-Fried used stolen FTX buyer funds to pay again Alameda’s lenders, purchase actual property and donate to U.S. political candidates to burnish his affect in Washington.

Bankman-Fried has pleaded not responsible and has argued that whereas he made errors working FTX, he by no means meant to steal funds. In his opening assertion final week, protection lawyer Mark Cohen informed jurors to query whether or not cooperating witnesses like Ellison have been placing a brand new, nefarious spin on outdated choices by Bankman-Fried which they’d initially agreed with.

Gary Wang, FTX’s former know-how chief, testified final week that Bankman-Fried directed him to permit Alameda to run a destructive stability on FTX and borrow as much as $65 billion from the trade – privileges different prospects lacked. A 3rd cooperating witness, former FTX engineering chief Nishad Singh, can also be anticipated to testify on the trial, which might last as long as six weeks.

Jurors have already heard a lot about Ellison. Cohen in his opening assertion mentioned Bankman-Fried had suggested Ellison to hedge Alameda’s bets in opposition to a downturn in cryptocurrency markets, however that she didn’t achieve this.

With out referring to Ellison by title, prosecutor Thane Rehn in his opening assertion mentioned Bankman-Fried had put in her as Alameda’s chief as a “entrance,” however that Bankman-Fried was nonetheless calling the pictures.

Adam Yedidia – a former FTX software program developer who lived with Bankman-Fried, Ellison and 7 others at a $35 million Bahamas penthouse close to the corporate’s headquarters – testified on Thursday that Bankman-Fried in early 2019 informed him that he and Ellison had had intercourse and requested his recommendation on whether or not he ought to date her. 

“I mentioned no,” Yedidia mentioned. “He mentioned he figured that was cheap and thought that I might say one thing like that.”

Whereas Bankman-Fried has written weblog posts and granted interviews to reporters since his December 2022 arrest, Ellison has maintained a low profile since she pleaded responsible that very same month.

In July, the New York Occasions revealed a narrative citing Ellison’s personal writings from earlier than FTX’s collapse wherein she described feeling overwhelmed at work and harm by a breakup with Bankman-Fried. After protection legal professionals acknowledged that Bankman-Fried had shared the writings with a Occasions reporter, U.S. District Decide Lewis Kaplan revoked his $250 million bail and despatched him to jail for possible witness tampering.