Caroline Ellison And Sam Bankman-Fried Are Not Crypto’s Bonnie And Clyde

Prosecutors this week are expected to call Caroline Ellison to testify in the federal criminal trial of Sam Bankman-Fried, founder of the cryptocurrency trading firm Alameda Research, and now-former-CEO of the more widely known cryptocurrency exchange FTX.

Much has been reported in the media about the fact that Ellison is a former girlfriend of Bankman-Fried. To be of value, however, Ellison’s testimony should focus less on any personal relationship that existed between the two, and more on Bankman-Fried’s acts as alleged in the indictment, as well as his knowledge and intent at the time he was committing those acts. Likewise, to be of value, media coverage of Ellison’s testimony should do the same. Ellison is no Bonnie Parker, and Bankman-Fried is no Clyde Barrow.

The Trial Of Sam Bankman-Fried

Bankman-Fried is on trial for wire fraud on customers of FTX, conspiracy to commit wire fraud on customers of FTX, wire fraud on lenders to Alameda Research, conspiracy to commit wire fraud on lenders to Alameda Research, conspiracy to commit securities fraud on investors in FTX, conspiracy to commit commodities fraud on customers of FTX, and conspiracy to commit money laundering.

The case relates to the alleged misappropriation and embezzlement of FTX customer deposits, the alleged use of billions of dollars in stolen funds for personal enrichment, to support the operations of FTX, to fund speculative venture investments, and to pay for Alameda’s operating costs, and the alleged delivery of false information to FTX’s investors and Alameda’s lenders.

To convict Bankman-Fried, prosecutors will need to prove not only that he committed the acts alleged in the indictment, but also that he had the requisite knowledge and intent to commit those acts. Few witnesses will be better positioned to provide the necessary evidence than those who participated in those alleged unlawful acts with him. Having been CEO of Alameda Research, one of those witnesses is Ellison.

Ellison Will Be Able To Provide Valuable Insider Testimony Tending To Prove Bankman-Fried’s Guilt

Last December, Ellison pleaded guilty to a superseding information charging her with conspiracy to commit wire fraud on customers, wire fraud on customers, conspiracy to commit wire fraud on lenders, wire fraud on lenders, conspiracy to commit commodities fraud, conspiracy to commit securities fraud, and conspiracy to commit money laundering. She entered into a plea agreement with the government, agreed to cooperate with prosecutors and agents, and agreed to testify if called as a witness.

As a company insider, former CEO of Alameda Research, and part of what has been referred to as Bankman-Fried’s inner circle, Ellison should be able to provide jurors with valuable insider testimony about Bankman-Fried’s alleged crimes. Her testimony, and the coverage of her testimony, should focus on Bankman-Fried’s acts and, even more importantly, his knowledge that the acts he was committing, and causing others at FTX and Alameda to commit, were fraudulent.

For his part, Bankman-Fried has tried to blame the implosions of FTX and Alameda on Ellison and has suggested that improperly moved funds were not criminal, but merely an oversight or the product of mismanagement.

Ellison Is Not The Only Witness With Insider Testimony

It cannot be overstated that the government is not calling Ellison as a witness because she is a former girlfriend of Bankman-Fried, but because she was CEO of Alameda Research, a company insider, a member of Bankman-Fried’s so-called inner circle, and co-conspirator. And Ellison is not the only company insider, inner circle member, and co-conspirator who will testify. As of this writing, another government witness, Gary Wang, who co-founded FTX with Bankman-Fried and was Chief Technology Officer at FTX, is in the middle of his testimony.

Like Ellison, Wang also pleaded guilty to a superseding information, in his case charging him with conspiracy to commit wire fraud on customers, wire fraud on customers, conspiracy to commit commodities fraud, and conspiracy to commit securities fraud. And like Ellison, Wang also entered into a plea agreement with the government, agreed to cooperate with prosecutors and agents, and agreed to testify if called as a witness.

Additionally expected to testify in the government’s case against Bankman-Fried is another company insider, inner circle member, and co-conspirator, Nishad Singh, who was Head of Engineering at FTX. Other employees not charged will testify as well, including developer Adam Yedidia, who testified last week.

Wang, meanwhile, has already begun to provide testimony about how code that Bankman-Fried directed to be written allowed for the inappropriate movement of money and cryptocurrency between FTX and Alameda.

Prosecutors will continue to call witnesses who can testify to the acts of Bankman-Fried and his knowledge and intent at the time he was committing those acts. The role of Ellison as a former girlfriend of Bankman-Fried is less relevant than her role as CEO of Alameda, a company insider, a member of Bankman-Fried’s inner circle, and a co-conspirator in an alleged multi-billion dollar fraud. To be of value, media coverage of her testimony should focus less on any personal relationship that existed between Ellison and Bankman-Fried, and more on Bankman-Fried’s acts, along with his knowledge and intent at the time he was committing those acts.