Caroline Ellison, the 28-year-old star witness in one of the most closely watched fraud trials in US history, is expected to take the stand as soon as Tuesday to offer rare insight into the collapse last year of a multibillion-dollar crypto empire.
This will be Ellison's first public appearance since her plea hearing in December of last year.
Her testimony is crucial to prosecutors' case against Sam Bankman-Fried, whom they accuse of orchestrating a scheme to steal billions of dollars from customer accounts in FTX, his now-bankrupt crypto trading platform.
Ellison is one of three former executives in Bankman-Fried's inner circle who have since turned their backs on him, agreeing to plead guilty and cooperate with prosecutors in the hopes of securing a lighter sentence.
But Ellison, the former CEO of FTX's sister firm Alameda Research, is perhaps the second-most important person in the case after Bankman-Fried, who has pleaded not guilty and repeatedly tried to disperse blame for what he sees as ultimately bad business decisions rather than fraud.
'I knew it was wrong'
As the former head of Alameda — and as Bankman-Fried's on-again-off-again girlfriend — Ellison is uniquely positioned to testify about how the crypto business spiraled out of control and ultimately collapsed into bankruptcy.
Prosecutors' case hinges on evidence that FTX and Alameda were deeply financially intertwined, despite repeated assurances from Bankman-Fried that they were separate companies, operating independently from one another. The reality, prosecutors say, is that SBF founded both companies and used them as his own personal piggy bank. With money siphoned directly from FTX customer accounts, they say, Bankman-Fried splurged on luxury real estate for himself and his family, placed risky wagers on digital assets, and funneled millions of dollars in donations to US political campaigns.
Ellison, a Stanford graduate with a degree in mathematics, told the court at a hearing in December that Alameda had a virtually unlimited borrowing facility in FTX, and that she agreed to keep the two firms' relationship hidden from investors and customers.
"I am truly sorry for what I did," Ellison said. "I knew that it was wrong."
Messy romantic drama
So far, the majority-female jury has heard exclusively from male witnesses, often speaking at length about technical aspects of the business, walking jurors through spreadsheets, repeating the definition of a cryptocurrency, computer code, and what it means to carry a negative balance.
Ellison, based on her now-public writings, could offer a more personal, raw testimony. Already, elements of her fraught relationship with SBF have become public — not least because Bankman-Fried himself leaked some of her private writings to the New York Times, an act that ultimately landed him jail after prosecutors argued he was trying to intimidate Ellison ahead of trial. (SBF's lawyers argued it wasn't witness tampering, but rather an attempt to counter a "toxic" media environment that had maligned his reputation).
In a Google document addressed to Bankman-Fried from the spring of 2022 Ellison wrote that their breakup had "significantly decreased" her excitement about her job, and that life at Alameda "felt too associated with you in a way that was painful."
Key moment under scrutiny
Prosecutors have hinted in court documents that one particular meeting, captured in an audio recording, will be part of their line of questioning.
As Alameda was spiraling last fall, Ellison told her employees that the fund had borrowed money from FTX customer accounts to pay back lenders. According to court documents, when one employee asks who made the decision, Ellison responds: "Um ... Sam, I guess."
Catch up
The trial began last Tuesday in Manhattan federal court, and is expected to last up to six weeks. Already, prosecutors have presented evidence that looks bad for Bankman-Fried, though the defense has yet to present its case. For everything you missed last week, catch up here.