Caroline Ellison, saying Sam Bankman-Fried corrupted her values, found relief when truth came out

NEW YORK (AP) — Sam Bankman-Fried’s former top executive, testifying in Manhattan federal court Wednesday, blamed the FTX founder for corrupting her values so she could lie and steal and got emotional when describing the cryptocurrency empire’s final days, saying the collapse of his businesses resulted in a “relief that I didn’t have to lie anymore.”

Caroline Ellison, who eventually was made chief executive of Bankman-Fried’s cryptocurrency hedge fund, Alameda Research, blamed the man she was entwined with romantically for several years since 2018 for creating justifications so that she could do things that she now admits were wrong and illegal.

Testifying for a second day, she recalled that Bankman-Fried said he wanted to do the greatest good for the most people and that rules like “don’t lie” or “don’t steal” must sometimes be set aside, effectively that the ends justified the means.

Assistant U.S. Attorney Danielle Sassoon asked Ellison how she was affected by Bankman-Fried’s philosophy.

“I think it made me more willing to do things like lie and steal over time,” she said.

Ellison spent much of the last two days walking the jury through how she, at Bankman-Fried’s direction, repeatedly had to tap into the customer deposits at FTX to solve problems at the hedge fund or at the exchange. FTX deposits would be withdrawn to pay for new investments or political donations, or to hide steep losses on Alameda’s balance sheet, she testified. All of this was done at the direction of Bankman-Fried.

All the while, Bankman-Fried put on a public veneer of being a good steward of cryptocurrency markets, cultivating relationships with politicians and the public. Ellison testified that Bankman-Fried once described his then-unkept hair as “valuable” to his image, and deliberately drove a Toyota Corolla to appear modest.

After several hours on the witness stand, Ellison got choked up as she described the final days of FTX and Alameda, saying that the early November period before the businesses filed for bankruptcy “was overall the worst week of my life.”

Still, she said she felt bad for “all the people harmed” when there wasn’t enough money left for all of FTX’s customers and Alameda’s lenders.