Caroline Ellison makes her first appearance in court in the ongoing FTX legal battle - who is she?

Caroline Ellison, the former CEO of FTX affiliate Alameda Research, testified against her former boss and ex-boyfriend, Sam Bankman-Fried, in court yesterday in the ongoing FTX court case against Bankman-Fried. She revealed private messages expressing her sense of "relief" after the trading firm she led was exposed for secretly misappropriating billions of dollars in customer funds from FTX, a cryptocurrency exchange.

Ellison's role as CEO of Alameda Research ended when the company collapsed in November 2022. She pleaded guilty to fraud and is now the key witness in the case against Bankman-Fried, who could face a lengthy prison time if convicted. Ellison is testifying under a deal with the government after she pleaded guilty to a series of fraud charges and conspiracy to commit money laundering. FTX co-founder Gary Wang also testified against Bankman-Fried this week after pleading guilty to fraud charges. Both are hoping to get their eventual sentences reduced.

In her testimony, Ellison shared private messages exchanged with Bankman-Fried in Alameda's final days. She recounted her complex emotions, from relief that the firm's secret dealings had been uncovered to a profound sense of guilt for those harmed.

Ellison's allegations involve fraudulent activities and hiding substantial kickbacks to FTX executives, as well as the fact that Alameda was "borrowing $10 billion from FTX customers." She also testified that Bankman-Fried was involved in bribery, approving a $150 million payment to release frozen funds on Chinese crypto exchanges.

Bankman-Fried, who has pleaded not guilty to all charges, awaits further questioning from his defence team as Ellison's testimony continues.

Who is Caroline Ellison?

Caroline Ellison is a former American business executive and quantitative trader who garnered attention for her involvement in a high-profile legal case. She served as the CEO of Alameda Research, an entity affiliated with the cryptocurrency exchange FTX, founded by Sam Bankman-Fried.

Ellison's journey began in Boston, where she was raised in the suburbs of Cambridge and Newton. She hails from an academic family, with both her parents, Glenn and Sara Fisher Ellison, being economists at MIT. Her academic prowess became evident when she achieved top honours in the American Mathematics Competitions and represented the United States in the International Linguistics Olympiad during her high school years. She continued to excel in mathematics, earning recognition in various competitions and becoming a National Merit Scholar upon graduating from Newton North High School in 2012.

Caroline Ellison's academic journey continued at Stanford University, where she graduated in 2016 with a bachelor's degree in mathematics. During her time at Stanford, she continued to distinguish herself in mathematics competitions and became involved in the effective altruism movement, aligning her philanthropic efforts with data-driven approaches.

In 2018, during a visit to the San Francisco Bay Area, Ellison was introduced to Sam Bankman-Fried's vision for Alameda Research, a cryptocurrency hedge fund co-founded in 2017. She embraced the opportunity to arbitrage cryptocurrencies and align her financial success with philanthropic pursuits. Her dedication and experience eventually propelled her to the position of co-CEO, alongside Sam Trabucco. In August 2022, she assumed the role of sole CEO of Alameda Research.

Her tenure at Alameda Research was not without controversy. Concerns arose about the balance sheet of the organization and its relationship with FTX. Anonymous sources alleged that FTX had used customer funds to support Alameda's liabilities, implicating Ellison, Sam Bankman-Fried, and two other FTX executives. This revelation ultimately led to legal actions and repercussions.

In the legal arena, Ellison hired Stephanie Avakian of the law firm WilmerHale as her lead attorney. In December 2022, she pleaded guilty to multiple charges related to wire fraud, securities fraud, and money laundering. During her plea hearing, she admitted to conspiring to mislead customers and investors, ultimately implicating key figures in the financial operations.

Ellison and other FTX senior employees contributed to the FTX Foundation's Future Fund, aiming to fund philanthropic endeavours. However, the fund faced challenges, including the resignation of senior staff and concerns about the legitimacy of its funding, leaving some beneficiaries uncertain about their grants.