How Sam Bankman-Fried’s ex-girlfriend helped the prosecutors in obtaining his conviction

In a shocking turn of events, FTX founder Sam Bankman-Fried was sentenced to 25 years in prison by Judge Lewis Kaplan. The sentencing came after testimony from Caroline Ellison, an ex-girlfriend of Bankman-Fried and an early recruit into his crypto enterprise. According to Judge Kaplan, Ellison’s testimony played a crucial role in the decision, as she revealed that Bankman-Fried was fully aware that his actions were criminal.

Ellison, who was a key witness for the Department of Justice in the prosecution of Bankman-Fried, struck a plea deal in December 2022, following FTX’s bankruptcy. She provided the government and the jury with text messages, documents, and secret recordings that ultimately led to Bankman-Fried’s conviction on all seven charges against him.

Manhattan U.S. Attorney Damian Williams expressed his disdain for Bankman-Fried’s actions, stating that his deliberate lies showed a blatant disregard for his customers’ expectations and a disrespect for the rule of law. Bankman-Fried was accused of using his customers’ money to increase his own power and influence.

Ellison, who also ran FTX’s sister hedge fund Alameda Research, pleaded guilty to multiple charges, including wire fraud, conspiracy to commit commodities fraud, and money laundering. Despite facing similar sentencing guidelines as Bankman-Fried, she is expected to receive a more lenient sentence due to her cooperation as a witness.

Ellison’s complex relationship with Bankman-Fried dates back to 2017 when she joined his crypto enterprise after leaving her job at Jane Street. Over the years, she served as Bankman-Fried’s girlfriend, roommate, and eventual CEO of Alameda Research. However, her promotion to CEO was met with criticism from both Bankman-Fried and herself, as she struggled to meet expectations.

Court filings revealed that Ellison’s compensation was significantly lower than other top executives at FTX. She received only $6 million compared to the billions distributed to other founders and senior employees. The leaked diary entries, published by The New York Times, shed light on Ellison’s struggles and dissatisfaction with her job, painting a bleak picture of her time at Alameda.

In the courtroom, jurors were finally able to hear from Ellison for the first time, as she helped prosecutors build a narrative that she was acting under the direction of Bankman-Fried in a scheme to steal customer money from FTX and use it to support Alameda during a difficult period for the company. Ellison testified that Bankman-Fried was still CEO of Alameda when the money funneling began, and she believed it to be FTX customer funds due to the amount exceeding profits and capital raised by the exchange.

Ellison revealed that she had considered resigning from Alameda multiple times between 2019 and November 2022, citing management issues as a limiting factor in the company’s growth. She admitted that there was no proper separation between FTX and Alameda operations and that communication between her and Bankman-Fried had been strained since their breakup in 2022.

During her testimony, Ellison avoided eye contact with Bankman-Fried, who often looked away with clenched hands. The assistant U.S. attorney representing the government expressed concern about the defendant’s behavior in court, suggesting it could be affecting Ellison given their past relationship and power dynamic.