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Where is Caroline Ellison? New York sightings prompt speculation former Alameda CEO, SBF ex has cut deal with prosecutors

By Darius McQuaid

15:16, 15 December 2022

Portrait of former Alameda Research CEO Caroline Ellison
Reports have surfaced that former Alameda Research CEO Caroline Ellison has been spotted in New York City – Credit: Alameda Research

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.

BTC to USD 

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.

XRP/USD

0.59 Price
-4.720% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 21:00 (UTC)
Spread 0.01168

DOGE/USD

0.12 Price
-7.280% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 21:00 (UTC)
Spread 0.0012872

SOL/USD

166.99 Price
-7.230% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 21:00 (UTC)
Spread 2.2652

ETH/USD

3,095.87 Price
-7.890% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 21:00 (UTC)
Spread 6.00

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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The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
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