Caroline Ellison, the former girlfriend of disgraced FTX founder Sam Bankman-Fried, was secretly recorded as she blamed her ex for a fateful decision to use customer funds to plug financial holes in the crypto giant’s failed hedge fund, according to court documents.
The recording of Ellison, the former CEO of Alameda Research, the hedge fund through which Bankman-Fried allegedly used FTX customer funds to make risky bets, was made by an Alameda employee during an all-hands meeting on Nov. 9.
Just days before FTX, the cryptocurrency exchange that was once worth as much as $32 billion, went bankrupt, 28-year-old Ellison convened employees to provide a “general overview of the situation,” telling them: “I guess, mostly I wanna say, like, I’m sorry. This really sucks.”
“I think my current default plan is that Alameda will likely wind down once we can, like, repay all of our creditors and sort of wind down a bunch of our, like, whatever remaining obligations we have,” Ellison is said to have told her employees.
According to the court filing, an Alameda employee pressed Ellison: “Who made the decision on using [FTX] user deposits?”
“Um…Sam, I guess,” Ellison responded, according to court documents filed in US District Court in southern New York.
Ellison is also said to have kept a memo titled “Things Sam is Freaking Out About” — the contents of which federal prosecutors plan to introduce into evidence at trial this fall, according to a recent court filing.
Ellison, who pleaded guilty to wire fraud and money laundering in December, is expected to testify at her former lover’s trial, which is scheduled to begin in Manhattan federal court on Oct. 2.
Prosecutors filed court papers on Monday indicating that the memo is one of several pieces of evidence they claim proves that Bankman-Fried defrauded FTX customers in order to cover losses incurred by Alameda.
Bankman-Fried, 31, who had been under house arrest at his parents’ Bay Area residence while awaiting trial, had his bail revoked by the judge overseeing his case last week after he allegedly leaked portions of Ellison’s private diary to a New York Times reporter.
The former FTX CEO, who at the height of his wealth was worth an estimated $17 billion, was remanded over the weekend to the notorious Metropolitan Detention Center in Brooklyn — the same federal jail cell that housed convicted sex trafficker Ghislaine Maxwell, reputed pedophile R. Kelly, and “Pharma Bro” Martin Shkreli.
Ellison reportedly confessed in her diary that her on-again, off-again relationship with Bankman-Fried was “causing drama.”
She detailed her unhappiness and discomfort with their relationship before the firm imploded last November in a series of Google documents, according to the New York Times, which has viewed the posts.
In one entry from February 2022, Ellison wrote that the star-crossed lovers were at risk of “making things weird” and “causing drama” at the company, worrying “it doesn’t really feel like there’s an end in sight,” the Times reported.
The publication of her alleged private writings infuriated federal prosecutors, who accused Bankman-Fried of witness tampering and asked a judge to issue an order that would bar the former billionaire and other parties from making public statements likely to interfere with a fair trial.
Bankman-Fried has denied any wrongdoing and pleaded not guilty to the array of charges.
The Post has sought comment from Bankman-Fried.
Additional Reporting By Thomas Barrabi
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