Sam Bankman-Fried "directed me" to commit fraud, former FTX executive Caroline Ellison says

Author Michael Lewis on the rise and fall of Sam Bankman-Fried

Former FTX executive Caroline Ellison, the government's star witness against Sam Bankman-Fried, took the stand Tuesday and accused him of orchestrating fraud at the cryptocurrency exchange. 

"He directed me to commit these crimes," Ellison  — who last year agreed to a deal with prosecutors in which she pleaded guilty to charges including wire fraud, securities fraud and commodities fraud — told the court. 

Viewed as key in making a criminal case stick against her one-time romantic partner, Ellison formerly ran Alameda Research, a sister hedge fund to FTX, the crypto currency platform co-founded by Bankman-Fried. Ellison pleaded guilty and agreed to cooperate with federal prosecutors after FTX imploded last year.

Alameda "ultimately took around $14 billion, some of which we were able to pay back," Ellison testified. 

Asked to identify Bankman-Fried, Ellison stood and took a while, before finding and confirming his presence in the courtroom. Her testimony was brief, lasting about 10 minutes, before the judge announced a break for lunch. Ellison's testimony was to resume Tuesday afternoon.

Bankman-Fried, 31, is accused of funneling billions of dollars from FTX to Alameda, allegedly using as much as $10 billion in customer deposits to cover luxury real estate purchases and large political donations. He has pleaded not guilty and faces a potential prison term of more than a century if convicted of federal fraud and money-laundering charges. 

"He had wealth, he had power, he had influence, but all of that was built on lies," Assistant U.S. Attorney Thane Rehn said. 

FTX collapsed over a four-day period in November, and Bankman-Fried was arrested in the Bahamas the following month. 

Ellison was called to the stand after Gary Wang, FTX co-founder, completed his testimony. 

Wang, who also pleaded guilty and agreed to cooperate with prosecutors, testified last week that Bankman-Fried tweeted assurances that FTX was in good shape, even as the exchange was unraveling. 

The defense is expected to make the case that Bankman-Fried misstepped, but his mistakes were not intentional and don't rise to the level of fraud. 

"Sam didn't intend to defraud anyone," Mark Cohen, Bankman-Fried's attorney, said, casting his client as a nerd whose business was taken down in a crypto crash that also demolished other startups. 

The son of Stanford University law school professors, Bankman-Fried has been jailed in Brooklyn for more than a month after his bail was revoked by the judge hearing the case, who ruled he had tried to interfere with witnesses. 

—CBS News' Cassandra Gauthier contributed to this report.

Read more
f

We and our partners use cookies to understand how you use our site, improve your experience and serve you personalized content and advertising. Read about how we use cookies in our cookie policy and how you can control them by clicking Manage Settings. By continuing to use this site, you accept these cookies.