Updated
- Caroline Ellison was the CEO of Alameda Research, a trading firm launched by Sam Bankman-Fried.
- She oversaw bets Alameda took with customer funds. She pleaded guilty to seven criminal counts.
- She was sentenced to two years in the fraud case on September 24. Here is her background story.
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As Sam Bankman-Fried’s crypto empire began to unravel in 2022, his ex-colleague, now 29-year-old Caroline Ellison, emerged as a figure of intrigue and speculation.
In August 2022, Ellison became the head of Alameda Research, Bankman-Fried’s trading firm that was closely intertwined with his fallen crypto exchange, FTX. By November, as FTX swiftly spiraled into bankruptcy, Ellison began to draw attention for her role in overseeing the risky bets Alameda took with customers’ funds.
She’s since pleaded guilty to conspiring with Bankman-Fried — her former on-again-off-again boyfriend — in an $11 billion fraud scheme and testified as the star witness in Bankman-Fried’s criminal trial.
The same judge who sentenced Bankman-Fried to 25 years in prison earlier this year handed down a two-year sentence to Ellison on September 24. Though the judge praised Ellison for cooperating in the prosecution against Bankman-Fried, he said that he could not let her off scot-free.
Ellison delivered a wrenching apology, holding back tears as she expressed regret for participating in the fraud before US District Judge Lewis Kaplan sentenced her in Manhattan federal court.
Here’s what we know about Caroline Ellison.
Ellison primarily grew up in Newton, Massachusetts, a suburb of Boston.
The late Supreme Court Justice Antonin Scalia reportedly lived in Ellison’s former home, she wrote on her now archived Tumblr blog, worldoptimization.
Her parents are both academics at Massachusetts Institute of Technology.
Her father, Glenn Ellison, and her mother, Sara Fisher Ellison, are economics professors at MIT.
Ellison and her two sisters “definitely got exposed to a lot of economics” growing up, she told Forbes. When Ellison was 8, she gave her father an economics study analyzing stuffed animal prices at Toys ‘R’ Us for his birthday in lieu of a card, Forbes reported.
Ellison exhibited a special passion for mathematics from an early age.
And her father supported her interest in the subject, too.
He encouraged her and her siblings to enter math competitions — which Ellison continued throughout middle school and high school, according to the Washington Post.
Ellison graduated from Newton North High School in 2012, and went on to Stanford University, where she studied mathematics.
Ellison said she picked Stanford because she wanted to get away from Boston and “try something different,” she said on The FTX Podcast in 2020.
Though she contemplated studying linguistics, political science, or computer science when she was a freshman, she said on the podcast that she opted for mathematics because there were more opportunities to take other classes on the side.
Ellison went on to work at the trading firm Jane Street after college.
Ellison spent around 18 months as a trader on Jane Street’s equities desk and said on the FTX Podcast that she “loved it.”
Ellison also met Sam Bankman-Fried at Jane Street, and the two reportedly bonded over their interest in effective altruism, for which SBF became a poster boy.
By 2018, Bankman-Fried had already launched a crypto trading firm called Alameda Research and persuaded Ellison to join the firm.
The switch from Jane Street to Alameda was initially challenge for Ellison, she has said.
After Bankman-Fried established the crypto exchange, FTX, in 2019, Ellison began taking more responsibility at Alameda.
Ellison and her colleague Sam Trabucco took over from Bankman-Fried as co-CEOs of Alameda in late 2021, and the duo were featured in Forbes’ 30 Under 30 list in 2022.
However, Bankman-Fried “remained the ultimate decision-maker” at Alameda, directing investment and operational decisions, the Securities and Exchange Commission has said.
“Though Ellison made some trading decisions, she frequently consulted with Bankman-Fried, particularly about strategic issues and significant trades,” the regulator said in an SEC complaint.
Bankman-Fried moved his crypto operations from Hong Kong to the Bahamas in 2021 where Ellison was among the 10-person crew of FTX and Alameda employees who all lived together.
All the members were reportedly paired off in relationships with one another at some point. Ellison had an on-and-off relationship with Bankman-Fried and he even made her a list of the pros and cons to dating him, according to Michael Lewis’s book about Bankman-Fried.
“In a lot of ways I don’t really have a soul,” Bankman-Fried once wrote to Ellison, according to Lewis. “There’s a pretty decent argument that my empathy is fake, my feelings are fake, my facial reactions are fake. I don’t feel happiness. What’s the point in dating someone who you physically can’t make happy?”
Ellison largely remained out of the limelight as FTX rose to fame.
“Caroline didn’t have a lot of gravitas,” one former staffer told The Financial Times, who thought she was “an intern” when they first met.
Ellison’s compensation at Alameda also remains a subject of continued inquiry.
Court documents filed last year show that Ellison received about $6 million as the CEO of Alameda, while her colleagues, including Nishad Singh, FTX’s former director of engineering, and Zixiao “Gary” Wang, received hundreds of millions.
Meanwhile, Bankman-Fried himself transferred $2.2 billion into his accounts, per those filings.
However, a lawsuit that FTX subsequently filed in July 2023 against its former deputies, including Ellison, alleges she improperly took $22.5 million in bonus payments from Alameda. She invested millions of that into an AI startup, according to Bloomberg, which noted that OpenAI rival Anthropic is Ellison’s only investment on PitchBook.
Until FTX’s unraveling, Ellison maintained an active online persona.
She left behind a trail of hot takes on crypto, polyamory, and race, apparently posting on X under the handle @carolinecapital, and apparently on two Tumblr accounts, worldoptimization, and worldoptimization-lifeadvice.
On her Tumblr, worldoptimization, she said that crypto was “mostly scams and memes when you get down to it” but she’s also seen “a real and pressing need for crypto.”
She also compared the polyamory in the Bahamas house to an “imperial Chinese harem,” noting on worldoptimization, that there was an established hierarchy and everyone knew where they fell within it.
Ellison is also reader who often posted book reviews on her Tumblr and is a Harry Potter fan.
Ellison said on The FTX Podcast that her parents read the first Harry Potter book aloud to her when she was just 3, and she read the second book by herself at the age of 5.
Her literary tastes, however, range far and wide. Among the last books she reviewed on worldoptimization are “The Golden Enclaves” by Naomi Novik and “Venomous Lumpsucker” by Ned Beuman, and she also appeared to enjoy the work of journalist Matthew Yglesias.
In August 2022, Sam Trabucco stepped down as co-CEO, and Ellison began to run Alameda on her own.
Catherine McQueen/ Getty Images
Ellison said working with Trabucco was “an incredibly formative experience” in a post on X at the time.
Ellison’s online presence has dwindled since FTX’s collapse.
Her last post on X was on November 6, 2022, when she came out in defense FTX’s balance sheet — in light of the bombshell Coindesk report that set off FTX’s implosion.
Bankman-Fried had told Ellison to publicly reassure investors about Alameda’s financial stability. In the post she noted that the balance sheet was only for “a subset of our corporate entities” and that “we have > $10 billion of assets” and “hedges” that weren’t listed.
Ellison pleaded guilty to seven charges in the collapse of FTX, including wire fraud, according to her December 2022 plea agreement with the Southern District of New York
Before Ellison struck a plea deal with the Department of Justice to cooperate with authorities, she was facing up to 110 years in prison.
She pleaded guilty to seven counts including fraud and money laundering for her role in the FTX scandal.
Ellison’s Google Doc entries surfaced in 2023 during the course of the case against Bankman-Fried and other top FTX associates.
Her entries, first reported by The New York Times, describe a sense of alienation and weariness with Sam Bankman-Fried and his enterprise.
She wrote in 2022 that, “At the end of the day I can’t wait to go home and turn off my phone and have a drink and get away from it all,” according to the report. She also noted that her romantic history with Bankman-Fried made Alameda “too associated with you in a way that was painful.”
Ellison also seemed to doubt about her capacity to lead Alameda, noting that she struggled with “leadership” and “decisiveness” in a document from April 2022, according to the Times. “Running Alameda doesn’t feel like something I’m that comparatively advantaged at or well suited to do,” she wrote, the Times reported.
Ellison testified as a key witness in the trial against Bankman-Fried.
Ellison’s testimony in the high-profile trial spanned three days in October 2023 in a Manhattan courtroom. She detailed how she and Bankman-Fried used Alameda Research to invest billions of dollars worth of assets covertly diverted from customers of FTX, the cryptocurrency exchange he controlled.
She told jurors how she worked with Bankman-Fried and other members of his inner circle to defraud the customers and investors of FTX.
Even before Ellison’s testimony she emerged as a key character in SBF’s trial. During the opening statements of the trial, Bankman-Fried’s attorney, Mark Cohen, portrayed Ellison as a “math nerd” who failed to factor in risk management.
He also argued that Bankman-Fried had asked Ellison to hedge Alameda’s positions to prevent it from losing money, but Ellison had failed to listen.