SBF’s ex-girlfriend Caroline’s diary exposed The story about SBF and Alameda

SBF's ex-girlfriend Caroline's diary reveals the story of SBF and Alameda.

Original authors: David Yaffe-Bellany, Matthew Goldstein Original translation: Luffy, Foresight News

In the months leading up to the SBF trial (October 2nd of this year), SBF leaked some of Caroline Ellison’s (a key witness in the case, SBF’s former girlfriend, and former CEO of Alameda) private documents to The New York Times. US prosecutors claim that SBF did this to discredit the witness and limit her testimony. The New York Times published an article about Caroline Ellison’s private documents, mainly discussing her relationship with SBF and the inner conflicts she had while working at Alameda. Foresight News has organized and translated the article as follows:

In the first three months of last year’s cryptocurrency market crash, Caroline Ellison, the 27-year-old CEO of the crypto hedge fund Alameda Research, was plagued by self-doubt.

In a Google document from February 2022, Ellison wrote, “I have been very unhappy and lost in my work.” She added, “At the end of the day, I can’t wait to go home, turn off my phone, and have a drink, away from everything.”

Ellison had a lot on her mind. In another Google document, she wrote that she didn’t think she was well-suited for managing Alameda, especially as a decision-maker. She also had a tumultuous relationship with Sam Bankman-Fried (SBF), the billionaire entrepreneur who founded Alameda and later founded FTX, one of the world’s largest cryptocurrency exchanges. They had an on-and-off relationship but eventually broke up, mainly because Ellison was worried about “making things weird in the workplace” or “bringing negative consequences.”

“It feels like everything has no end,” she wrote in a document from February 2022.

Now, Ellison will testify as a witness in Sam Bankman-Fried’s criminal trial scheduled for October 2nd.

SBF, 31, is accused of misusing billions of dollars of customer assets and faces eight counts of fraud and violations of election law. His downfall led to the bankruptcy of FTX and Alameda, turning Ellison from a powerful but relatively discreet figure into a tabloid headline. In December of last year, she admitted to the fraud charges and agreed to cooperate with federal prosecutors in their investigation of her former boyfriend.

SBF’s case is set to reach its final judgment in a Manhattan court. FTX’s two other executives, Nishad Singh and Gary Wang, have also pleaded guilty and agreed to cooperate. In June, after weeks of legal arguments regarding the charges against SBF, the judge in the case set a fast timetable for the trial’s preparation phase, requiring prosecutors to provide a witness list and other final materials. Two informed sources said that prosecutors are expected to start contacting more witnesses (to testify) in August.

As SBF’s former girlfriend and one of his earliest partners, Ellison has unique insights into the FTX founder. According to The New York Times and four sources who have reviewed Ellison’s documents, she recorded many of her thoughts in writing, observing her personal and professional life in handwritten journals and Google documents. These documents have been widely circulated among lawyers involved in the case.

These previously unreported documents provide new clues to understand Ellison’s mental state and changes in the last few months at FTX. The 28-year-old Ellison is a prolific writer whose posts on Tumblr about Harry Potter and Jane Austen have received widespread criticism. But the Google documents are more private, some of which are directly written to SBF, revealing the complexity of their relationship and her conflicting feelings towards Alameda.

In a Google document written to SBF in April 2022, Ellison wrote that her earlier breakup with him “significantly dampened my excitement about Alameda.” She added that life at the hedge fund “feels too closely tied to you, which is painful.”

Representatives from Ellison’s legal team and SBF’s lawyers declined to comment on this. A spokesperson for the Manhattan U.S. Attorney’s Office, responsible for prosecuting the case, also declined to comment.

Ellison graduated from Stanford University, where she met SBF while working at the quantitative trading firm Jane Street after graduation. They both dedicated themselves to effective altruism, which has attracted many followers in the technology and finance industries.

SBF left Jane Street in 2017 to found Alameda and recruited Ellison as a trader. In 2021, he promoted her to co-CEO, working alongside another early employee, Sam Trabucco.

At the same time, SBF and Ellison also began an unstable romantic relationship, breaking up and reconciling multiple times. At times, Ellison worried that SBF did not think she was good enough. In a Google document in February 2022, she wrote that when he was around, she had a “shrinking instinct, becoming quieter and more compliant.”

After one breakup, Ellison cut off contact with SBF. “I felt very sad,” she wrote in a Google document in April 2022. “Not contacting you is the only way for me to regain a sense of strength.”

Sam Bankman-Fried, founder of Alameda and FTX, in his office in Hong Kong in 2021

As of last year, SBF has become one of the world’s most famous cryptocurrency entrepreneurs, with his photos frequently appearing on billboards and magazine covers. His fame seems to have made Ellison’s life at FTX and Alameda more difficult.

In a document written in April 2022, she wrote that staying at Alameda means “having to be by your side all the time, constantly hearing people talk about how great you are.”

Ellison’s compensation is far less generous than that of other executives at FTX and Alameda, but it is unclear whether she is aware of this. According to court documents, the founders and other key employees of the exchange received $3.2 billion in payments and loans. Ellison received $6 million, while FTX’s engineering director, Mr. Singh, received $587 million, and one of the founders, Mr. Wang, received $246 million. SBF received $2.2 billion.

In May 2022, the cryptocurrency market crashed, and several well-known companies went bankrupt. Regulatory agencies claimed that during the crisis, SBF, Mr. Wang, Mr. Singh, and Ellison used billions of dollars of customer funds deposited in FTX to fill the loopholes in Alameda’s account.

Even before this, Ellison doubted her own abilities. In a document from April 2022, she listed the difficulties she encountered, including “leadership” and “decision-making.”

“Running Alameda doesn’t feel like something I have a relative advantage or suitability for,” she wrote.

By the autumn of last year, SBF had lost confidence in Alameda. According to court records, he considered closing the company and invested over $400 million in another trading company, Modulo Capital, led by another former Jane Street trader that SBF had met.

Two individuals who have seen Ellison’s documents said that she expressed jealousy, resentment towards Modulo, and a feeling of being excluded in some of her writings.

SBF’s business empire collapsed in November due to a bank run, exposing an $8 billion deficit.

“I was just getting more and more afraid of this day coming, which made me feel more and more depressed,” Ellison wrote in a letter to him in that month, as excerpted from court records. “Now that this has really happened, it feels good to end it all.”

In December of last year, SBF was arrested in the Bahamas, where FTX is headquartered, and was taken to a prison not far from his luxury apartment. Previously, SBF and Ellison lived in this luxury penthouse with eight other roommates. SBF is currently under house arrest at his parents’ home in Palo Alto, California.

People who know Ellison said they were shocked by her candid admission of her shortcomings. In December, she expressed “deep remorse” for her fraudulent behavior in court. “I know it was wrong,” she said.

It is expected that Ellison will repeat this statement during SBF’s trial, which is expected to last four to five weeks. Two informed individuals said that much of the trial will revolve around messages sent on the Signal messaging app by SBF and the three collaborators.

Lawyers familiar with the case said that as a woman in the male-dominated cryptocurrency industry, Ellison may have an easier time gaining sympathy from the jury compared to the other collaborators. In an interview last year, SBF attributed part of the blame for the collapse of FTX to Alameda, stating that he was hardly involved in Alameda’s day-to-day management.

Former federal prosecutor Moira Penza said that the “power imbalance” between Ellison and SBF could give her a persuasive voice. “But in my opinion, this may not be a good thing for the defendants, especially when it comes to (using) the behavior of the other party with whom they had an intimate relationship (to exonerate themselves),” Penza said.