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How Caroline Ellison rose to prominence as the CEO of Alameda


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    Before the massive collapse of FTX and Alameda Research, Caroline Ellison was celebrated as a Stanford math whiz who reached the top of the crypto ladder by age 28.

    But as the world learned she used the investment firm she led as a personal piggy bank for her ex-boyfriend Sam Bankman-Fried, an image emerged of a young woman who was completely unequipped for a CEO position in the crypto exchange industry.

    In the hopes of receiving a lesser sentence for her own role in the massive scam, Ellison pled guilty to fraud and testified in Bankman-Fried's fraud trial last month, claiming he directed her to funnel $14billion in client funds from Alameda to FTX.

    The daughter of MIT economic professors, Ellison became involved with Bankman-Fried's doomed business in March of 2018, while she was an intern for Jane Street, a boutique investment firm where he worked as a trader.

    The two bonded over their interest in 'effective altruism' - the idea of getting rich in order to give billions to charity. 

    Caroline Ellison, the former CEO of Alameda Research

    Ellison and Bankman-Fried bonded over their interest in 'effective altruism' - the idea of getting rich in order to give billions to charity 

    Over coffee in Berkeley, California, Bankman-Fried asked Ellison to join Alameda Research, a digital currency hedge fund that he wanted to use to exploit the differences in in pricing for Bitcoin in different countries. He reportedly claimed he wanted to make billions to give to charity. 

    Ellison said in court that she and Bankman-Fried first slept together in the fall of 2018 and then dated from summer 2020 to summer 2021 and that she dumped him because he was 'distant' and not 'paying attention to her.' 

    She had only 18 months of trading experience when she moved to Alameda. She became co-chief executive of Alameda in 2021 - at the time she and Bankman-Fried were 'on a break' - and chief executive in 2022. 

    Bankman-Fried had started FTX two years after founding Alameda Research in a bid to create what he saw as a a modern cryptocurrency exchange. He eventually decided to step away from Alameda to focus full-time on FTX and earned fame as a 'crypto czar' - with celebrities like Tom Brady promoting the new exchange.

    By the summer of 2021, under Ellison's leadership, Alameda was trading around $5billion a day and she was featured on Forbes' 20 Under 30 list. 

    In interviews depicting her as a young math genius, Ellison often spoke of the importance of being 'comfortable' with taking risks in order to find professional success. 

    'Being comfortable with risk is very important,' Ellison said on a podcast in 2022. 'There are a lot of people who are very smart, but aren't good, necessarily, at the messy world of trading—especially crypto.'

    Just a few months after becoming the sole CEO of Alameda, the trading firm and FTX were exposed as scams.

    Ellison was born and raised in Boston with her father Glenn Ellison, MIT's head of economics, and Sara Fischer Ellison, an economics lecturer at the prestigious university

    Ellison told the jury that Bankman-Fried 'directed me' to commit Fraud, and all the crimes 'were committed with Sam'

    After the FTX crash, attention turned to Alameda's $10billion in assets and claims the firm funneled FTX's customer's money to make risky investments. 

    Soon, Ellison's demeanor and quotes, initially seen as precocious genius, were seen as evidence of malpractice.

    'This was very much like, oh, yeah, we don't really know what we're doing,' she had told Forbes about Alameda's success before the fall.

    She even once bragged that she needed only 'elementary grade math' to run the firm and claimed to dislike common trading safeguards such as stop-loss orders, a way of capping losses and reducing risk.

    The entire operation has been described as being 'run by a gang of kids in the Bahamas'. According to CoinDesk she was among the nine friends who lived with the former tycoon in a luxury penthouse on the Caribbean island.

    Bankman-Fried and Ellison apparently weren't the only pair getting cozy in the Bahamas, with reports that the group were all dating each other. 

    Ellison was born and raised in Boston with her father Glenn Ellison, MIT's head of economics, and Sara Fischer Ellison, an economics lecturer at the prestigious university.

    In a now-deleted Tumblr post called called WorldOptimization, Ellison wrote that 'women are better suited to being homemakers and rearing children than doing Careers.'

    In a list she titled, '~cute boy things,~' Ellison added: 'controlling most major world governments.'

    Ellison had also written about her exploration of polyamory, which she said led her to believe 'everyone should have a ranking of their partners, people should know where they fall on the ranking, and there should be vicious power struggles for the higher ranks.'

    In what prosecutors called 'the biggest financial frauds in American history' FTX lent Alameda billions in clients' money without their knowledge or permission. The crisis at FTX was triggered when customers rushed to withdraw their funds but the company couldn't pay out.

    Ellison was portrayed as a math genius before the FTX collapse and once even once bragged that she needed only 'elementary grade math' to run the firm. She's seen on a podcast in 2022

    Testifying as the prosecution's star witness, Ellison said that Bankman-Fried set up the computer system loopholes that allowed the fraud to take place. 

    In an unpublished 250-page memo, Bankman- Fried blamed Ellison for the fraud, aiming she was ill equipped for the role he gave her, and she refused to implement his trading strategies that would have prevented the collapse.

    He wrote: 'She continually avoided talking about risk management — dodging my suggestions — until it was too late... Every time that I reached out with suggestions, it just made her feel worse. I'm sure that being exes didn't help.'

    According to the memo, the couple's relationship ended 'the same way most of my relationships end - They want more intimacy and commitment and public visibility than I do, and I feel claustrophobic.'

    Bankman-Fried argued Alameda would have stayed solvent if Ellison had agreed to hedge its aggressive trading strategy, as he claims he suggested.

    'If Alameda had hedged, it would have remained solvent and prevented the entire unhappy story,' he wrote.

    Ellison told a New York court last year that she ran Alameda Research and essentially had access to an 'unlimited' amount of FTX client money.

    She pleaded guilty to fraud charges, confessing she agreed with Bankman-Fried to give 'materially misleading financial statements' in order hide the arrangement - which she knew was illegal.

    Assistant US Attorney Danielle Sasson asked Caroline Ellison what Bankman-Fried said about spending money on politics.

    Ellison said: 'He thought it was very effective, you could get very high returns in terms of influence by spending relatively small amounts of money.

    'He donated $10million to (Joe) Biden and that was a relatively small amount of money. He felt that was something that got him influence and recognition.'

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