Caroline Ellison: What We Were Doing with FTX was Wrong

Caroline Ellison – the 28-year-old girlfriend of Sam Bankman-Fried and the former CEO of Alameda Research, a company founded by SBF – has admitted in recent testimony that she knew what was happening with FTX was wrong.

Caroline Ellison on FTX: It Was Wrong

The big bang for FTX comes in the shape of Alameda, which borrowed money from the crypto exchange in the form of user funds to pay off separate debts. Both companies were required to remain individual entities. In conjoining them both together through the borrowing of assorted funds, it’s likely that Sam Bankman-Fried engaged in illegal activities.

It is also alleged that some of those user funds went towards paying for luxury Bahamian properties for the exchange’s employees and executives.

Ellison has recently pled guilty to multiple federal charges and has sworn to cooperate with prosecutors against her boyfriend SBF in exchange for leniency. In recent testimony, she laid out the situation involving Alameda and FTX and said that she knew the activities she and her constituents were engaging in were wrong. She said:

I knew that it was wrong… From 2019 through 2022, I was aware that Alameda was provided access to a borrowing facility on, the cryptocurrency exchange run by Mr. Bankman-Fried. In practical terms, this arrangement permitted Alameda access to an unlimited line of credit without being required to post collateral, without having negative balances, and without being subject to margin calls on’s liquidation protocols. If Alameda’s FTX accounts had significant negative balances in any particular currency, it meant that Alameda was borrowing funds that FTX’s customers had deposited on the exchange.

With her testimony, the situation is looking rather grim for Sam Bankman-Fried, who was recently extradited back to the United States. He is presently awaiting trial at his parents’ California home. Ellison said that at first, she had no problem hiding the relationship between Alameda and FTX from customers. She commented:

I agreed with others to borrow several billion dollars from FTX to repay those loans.

In an interview in late November, Sam Bankman-Fried said that he had made a lot of mistakes during his time at FTX and that he had no intention of hurting anyone. He stated:

I made a lot of mistakes. There are things I would give anything to be able to do over again. I didn’t ever try to commit fraud on anyone.

The SEC Has Stepped In

In a civil complaint against Sam Bankman-Fried, the Securities and Exchange Commission (SEC) said that the crypto exec engaged in long-term fraud that resulted in billions of dollars getting lost. The complaint reads:

Bankman-Fried was orchestrating a massive, years-long fraud, diverting billions of dollars of the trading platform’s customer funds for his own personal benefit and to help grow his crypto empire.

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