FTX crypto boss, Sam Bankman-Fried’s ex-girlfriend is reportedly working with prosecutors to ‘spin her narrative’ days after she recruited a legal team and top lawyer in his $ 1.8 billion fraud case.
Caroline Ellison, 28, is the CEO of Alameda Research, another company founded by Bankman-Fried – which is accused of gambling with FTX client money on risky trades.
With Bankman-Fried set to appear in a Bahama courthouse on Monday following his arrest last week, Ellison appears to be working with officials against her ex-lover.
Former US Attorney Marc Litt weighed in on the matter and said he wouldn’t be surprised if Ellison was cooperating with investigators because she has ‘a choice to make.’
Bankman-Fried is behind what prosecutors are calling ‘one of the biggest financial frauds in American history’ following the collapse of his once billion-dollar digital currency exchange, FTX.
Bankman-Fried was arrested in the Bahamas on Monday and charged with money laundry and fraud. He is currently awaiting extradition back to the US.
Ellison and Bankman-Fried were previously in a relationship and lived together with eight other senior FTX and Alameda staffers at Bankman-Fried’s $40 million Bahamas penthouse.
Bankman-Fried, who owned a majority stake in Alameda, installed Ellison as CEO of the multibillion dollar fund in October 2021 despite her limited professional trading experience.
He appears to accept FTX lent Alameda billions of dollars in clients’ money without their knowledge or permission. The crisis at FTX was triggered when customers rushed to withdraw their funds but the company couldn’t pay out.
Litt said he wouldn’t be surprised if Ellison was working with the federal government in order to save herself.
“She was the CEO of a company that seems to be intimately involved in the alleged fraud, and she’s… in the cross-hairs of the government… and she’s got a choice to make.”
Ellison prepares to face scrutiny as prosecutors look into whether FTX misused billions of dollars in client funds by transferring them to Alameda.
She has hired Stephanie Avakian, former director of the US Securities and Exchange Commission’s Division of Enforcement.
“There’s a little bit of a race to the prosecution at this point because the government needs cooperators,” Litt said.
“It’s in her interest to spin her narrative and tell her story before everybody else that the government talks to, points the finger at her, so she has every incentive to cooperate and get the benefits of cooperation.”
Bankman-Fried will appear in court on Monday to agree to extradition to the US after seeking to delay his return.
Bankman-Fried faces up to 115 years in prison if ultimately convicted of all eight counts he faces in the United States, though any sentence would ultimately be determined by a judge based on a range of factors.