Where is Caroline Ellison? New York sightings prompt speculation former Alameda CEO, SBF ex has cut deal with prosecutors
15:16, 15 December 2022
Caroline Ellison, former CEO of Alameda Research, the firm at the heart of the collapse of FTX, has been spotted in New York – leading to speculation she has made a deal with prosecutors.
Ellison was spotted in a Manhattan coffee shop on 4 December, shortly before the FTX founder was arrested.
Sam Bankman-Fried, founder and former CEO of FTX was arrested in the Bahamas by the Royal Bahamas Police Force on 12 December 2022.
The following day Bankman-Fried was charged by the US Securities and Exchange Commission (SEC) with orchestrating a scheme to defraud equity investors in FTX Trading Ltd (FTX).
SEC chair Gary Gensler said the “alleged fraud” committed by Bankman-Fried was a “clarion call to crypto platforms that they need to come into compliance with our laws”.
It has also been alleged that Alameda Research, the cryto hedge fund founded by Bankman-Fried in 2017, received clients’ assets from FTX, and that FTX mishandled customer funds.
A statement released by the SEC when Bankman-Fried was charged claims he had “orchestrated a years-long fraud” to conceal key facts from FTX’s investors, including:
- The undisclosed diversion of FTX customers’ funds to Alameda Research LLC, his privately-held crypto hedge fund;
- The undisclosed special treatment afforded to Alameda on the FTX platform, including providing Alameda with a virtually unlimited “line of credit” funded by the platform’s customers, and exempting Alameda from certain key FTX risk mitigation measures;
- Undisclosed risk stemming from FTX’s exposure to Alameda’s significant holdings of overvalued, illiquid assets such as FTX-affiliated tokens.
FTX and Alameda filed for bankruptcy on 11 November 2022.
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Ellison’s deal?
Howard Fischer, a former SEC lawyer, told the New York Post he believes Ellison may have made a deal with the authorities and turned on Bankman-Fried.
Fischer said: “She would have among the greatest incentives to cooperate, as it was seeming likely that in his effort to exculpate himself, Bankman-Fried would try to finger her.
“The speed of the indictment and the breadth of the charges [against Bankman-Fried] meant someone relatively senior is cooperating with the federal authorities in exchange for leniency for their own potential misconduct.
“It is possible Bankman-Fried’s publicity tour, in which he repeatedly disclaimed either knowledge of – or responsibility for – mishandling or theft of customer assets, spurred senior officers to fear that he would specifically blame them.
“Often, the first to the table gets the most lenient treatment, so it is smart to turn before others have the chance to.”
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Were Ellison and Bankman-Fried dating?
The inner circle of FTX and Alameda Research were all said to be living together in a penthouse in the Bahamas where the cryptocurrency derivatives exchange was headquartered. Bankman-Fried and Ellison were said to be dating at one point.
The Bahamas penthouse room-mates included Bankman-Fried; Ellison; Gary Wang, an FTX co-founder and chief technology officer; and Nishad Singh, FTX’s director of engineering, CoinDesk reported.
Most of the people living in the Bahamas mansion were said to be Bankman-Fried’s co-workers from Jane Street or people he met at Massachusetts Institute of Technology (MIT), where he studied physics from 2010-2014.
Ellison was born in 1994, the daughter of Glenn Ellison, a US economist and professor at MIT.
According to LinkedIn, Ellison was a trader at Jane Street, a global proprietary trading firm, from 2016 to 2018. Bankman-Fried was also a trader at Jane Street, from 2014 to 2017.
Ellison then moved to Alameda Research in 2018 as a trader and became CEO of the firm in 2021.
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