Multibillion-Dollar Trial Not Going So Well for Sam Bankman-Fried

Star witness and Sam Bankman-Fried’s former girlfriend of Sam Bankman-Fried, Caroline Ellison, says he directed the crimes.

Sam Bankman Fried trial, girlfriend Caroline Ellison
SBF trial, Caroline Ellison

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Star witness and former girlfriend of Sam Bankman-Fried says he directed the crimes.

So far, the Sam Bankman-Fried trial can be summed as, “It seems no one but his quasi-biographer, Michael Lewis, thinks he is innocent.”

Bankman-Fried, co-founder of bankrupt cryptocurrency exchange FTX, has pleaded not guilty to seven criminal charges. They include conspiracy to commit securities fraud, wire fraud, fraud on investors and customers, and fraud in connection with the purchase and sale of derivatives, as well as money-laundering charges. If found guilty, the 31-year-old former FTX CEO could go to prison for up to 110 years.

His co-founder, Gary Wang, 30, has already testified against him in the trial, which began last week, saying he and Bankman-Fried knowingly committed financial crimes together against FTX customers, which resulted in the loss of an estimated $8 billion. Wang, Bankman-Fried’s former colleague roommate, described how he and Bankman-Fried began shifting billions of dollars from investors and customer accounts as far back as 2017 – then “lied to the public” about it – even as FTX, once a $32 billion empire, went under in November of 2022.

Caroline Ellison, 28, the prosecution’s star witness and Bankman-Fried’s former girlfriend, stepped into the courtroom Tuesday and similarly pointed the finger at Bankman-Fried. She said that Bankman-Fried, her former boss, told her to use FTX customer deposits to fund investments and loan repayments for his crypto hedge fund, Alameda Research, which she ran as the CEO. Over the course of four hours of testimony, she blamed Bankman-Fried for FTX’s implosion and the loss of around $14 billion of customer money that Alameda and FTX were unable to pay back in full.

“He directed me to commit these crimes,” she told a crowded Manhattan courtroom.

Ellison’s testimony corroborated what Wang also said about Bankman-Fried’s direction of him to grant “special privileges” to Alameda by altering FTX computer code to grant Alameda a credit line of as much as $65 billion. The number was so huge that Judge Lewis A. Kaplan had to check twice with Wang to see if he meant “$65 billion” instead of “$65 million.” Wang said that he did.

“That means Bankman-Fried basically put Ellison in charge of one of the notionally biggest hedge funds in the world” and nobody knew it, a Wall Street crypto source tells Power Corridor.

Ellison also provided more personal anecdotes about Bankman-Fried’s mindset and appetite for gambling while running FTX. She said that he thought he might have a chance at being President of the United States one day – and, if given the choice to do a coin flip where heads meant the world would be “twice as good” and tails meant the world would be destroyed, he’d happily take the risk.

The trial continues this week, with few but Lewis throwing Bankman-Fried a bone – at least, publicly. In a recent interview, the author said he was not at all impressed with what he saw as “the lynch mob mentality, very quick rush to judgment when it all fell apart, very quick movement by the prosecution” against Bankman-Fried.

Lewis said he thinks the truth is “complicated,” adding, “I think a lot of people are certain about what happened when they actually don’t know what happened.”