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Who is Caroline Ellison? Alameda CEO is part of Bankman-Fried inner circle

By Darius McQuaid

Edited by Charlie Mellor


Updated

Alameda Research CEO Caroline Ellison
Ellison and Sam Bankman-Fried were believed to be dating at one point – Credit: Alameda Research

Caroline Ellison, the former CEO of Alameda Research, has spoken of her regret regarding her role in the collapse of the quantitative crypto trading firm and its sister company, the cryptocurrency exchange FTX.

During a court hearing, in which she pleaded guilty to seven counts of fraud, Ellison said she agreed with Sam Bankman-Fried to hide from FTX investors, lenders and customers that Alameda could borrow unlimited sums from the exchange, Reuters reported on 23 December 2022.

“We prepared certain quarterly balance sheets that concealed the extent of Alameda’s borrowing and the billions of dollars in loans that Alameda had made to FTX executives and to related parties,” Ellison told US District Judge Ronnie Abrams – who has since stepped down from hearing the case because of a possible conflict of interest.

Ellison told the court that when investors in June 2022 recalled loans they had made to Alameda, she agreed with others to borrow billions of dollars in FTX customer funds to repay them, understanding that customers were not aware of the arrangement.

“I am truly sorry for what I did,” said Ellison according to Reuters.

She added, reported The Independent, that: “I knew that it was wrong. And I want to apologise for my actions to the affected customers of FTX, lenders to Alameda and investors in FTX.”

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Ellison pleads guilty to fraud

On 22 December, Damian Williams, United States Attorney for the Southern District of New York (SDNY) announced Ellison and Wang had pleaded guilty to fraud charges for their participation in what the US Securities and Exchange Commission (SEC) has described as a “multiyear scheme” to defraud FTX investors.

Ellison agreed to co-operate with US authorities amid the ongoing investigation around the collapse of FTX.

According to the SEC’s charges filled with the US District Court for SDNY, Ellison allegedly used “misappropriated FTX customer funds for Alameda’s trading activity”.

In addition, the filing claimed that “Ellison, at Bankman-Fried’s direction, caused Alameda to borrow billions of dollars from third party lenders” that were “backed in significant part by Alameda’s holdings of FTT – an illiquid crypto asset security that was issued by FTX and provided to Alameda at no cost”. The SEC court document added:

“Ellison, acting at the direction of Bankman-Fried, engaged in automated purchases of FTT tokens on various platforms in order to increase the price of those tokens and inflate the value of Alameda’s collateral, which allowed Alameda to borrow even more money from external lenders at increased risk to the lenders and to FTX’s investors and customers, all in furtherance of the scheme.”

These charges have come as Bankman-Fried was released on a $250m (£207m) bond package while he awaited fraud charges.

The bond was signed by Bankman-Fried’s parents who have agreed to keep him under house arrest in California where they live.

Bankman-Fried’s parents posted the equity in their home as assurance for SBF’s return to court on 3 January 2023.

Three years to rise to the top as CEO

Ellison has become renowned following the bankruptcy filing of the FTX and Alameda Research, both of which were founded by Bankman-Fried. It took her three years to rise from being a trader at Alameda to the position of its CEO.

Her notoriety has been fuelled by some of the things she has said on Twitter, such as her remarks about amphetamine use, or matters raised by other Twitter users.

She was born in 1994, the daughter of Glenn Ellison, a US economist and professor at the Massachusetts Institute of Technology (MIT) – the same university where Bankman-Fried went to study physics from 2010-2014.

According to LinkedIn, Ellison was a trader at Jane Street, a global proprietary trading firm, from 2016-2018. Bankman-Fried was also a trader at Jane Street, from 2014-2017.

Ellison then moved to Alameda Research in 2018 as a trader and became the firm’s CEO in 2021.

Were Ellison and Bankman-Fried dating?

By 2022, 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 also said to be dating at one point.

The Bahamas penthouse roommates included Bankman-Fried; Ellison; Gary Wang, an FTX co-founder and chief technology officer; and Nishad Singh, FTX’s director of engineering, CoinDesk reported.

The majority 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 MIT.

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Polyamorous Harry Potter fan

Ellison has been described as a “polyamorous Harry Potter fan”. She is a graduate of Stanford University, where she studied mathematics from 2012-2016.

Polyamorous people have multiple loving, intentional and intimate relationships at the same time.

In relation to Harry Potter, Ellison said: “I was pretty obsessed with Harry Potter as a kid. I started, I was three when the first book came out, my parents read it aloud to me, and when I was five, the second book came out, I refused to wait for my parents to read it, so I read it myself.”

Ellison has said nothing via Twitter since the bankruptcy filing of FTX on 11 November, with her last tweet being on 6 November.

‘They’ll do anything for each other’

People familiar with how the dynamics of the penthouse in the Bahamas worked told CoinDesk: “They’ll do anything for each other.” Another said: “The whole operation was run by a gang of kids in the Bahamas.”

A third person familiar with the matter said: “Gary, Nishad and Sam control the code, the exchange’s matching engine and funds. If they moved them around or input their own numbers, I’m not sure who would notice.”

One of the people with knowledge of the situation also added that “It’s been radio silence from Sam” and that Twitter had provided them with news on the ongoing matters during this tumultuous time for the company.

Appreciation of amphetamines

Three months prior to being made CEO of Alameda, Ellison had said via Twitter that there was “nothing like regular amphetamine use”.

In a series of tweets, she went on to detail how amphetamine use made you “appreciate how dumb a lot of normal, non-medicated human experience is”.

Amphetamines can be legal when prescribed by a doctor in certain circumstances, but otherwise are illegal and go by the street name speed.

Ellison’s Tumblr account has also been allegedly found, using the name “fake charity nerd girl”.

It was stated in one post that something she found annoying were articles that highlighted a group of people who should be jailed but then did not spell out who these people were or what crimes they had committed to warrant imprisonment.

The account added that “you cannot send someone to jail just because you do not like them even if they contributed to the devastation of the global economy”.

Co-captain at Alameda

Ellison was the co-CEO of Alameda up to August 2022 with Sam Trabucco. Trabucco is another graduate from MIT, where he studied mathematics and computer science from 2011-2015.

They both became co-CEOs of Alameda at the same time. However, Trabucco became a trader at the firm in 2019. It only took Trabucco two years to be promoted from a trader to CEO, a year quicker than Ellison.

Trabucco then stepped down as Alameda co-CEO in August 2022, just two months before it filed for bankruptcy. He said via Twitter that he would no longer hold the position of co-CEO but remained as an adviser, leaving Ellison to become CEO.

In the same Twitter thread, Trabucco added: “Alameda is an awesome place.”

Ellison’s worried last text before FTX went bankrupt

Ellison’s text messages in the run-up to the FTX bankruptcy were revealed in documents reviewed by the New York Times.

On 8 November – three days before FTX and Alameda filed for bankruptcy – Ellison reportedly sent a message to an internal FTX group chat that she was “kinda worried that everyone is gonna quit/take time off”, alongside a sweating-face emoji.

The group allegedly included Ryne Miller, a lawyer and general counsel for FTX.US.

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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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