Fallen crypto king Sam Bankman-Fried’s blockbuster criminal fraud trial kicks off this week in Manhattan federal court – where his former lover and business partner could be the star witness that dooms him.
Caroline Ellison, the 28-year-old former head of Bankman-Fried’s cryptocurrency trading firm Alameda Research, could be the most impactful ex-member of the once-billionaire’s orbit that federal prosecutors call to the stand at the trial, which begins Tuesday morning with jury selection.
“She could be the witness who puts him in prison,” attorney Howard Fischer, who took executives accused of fraud to trial as a senior counsel at the US Securities and Exchange Commission between 2010 and 2019, told the Post.
Ellison — who also dated Bankman-Fried, 31, on-and-off and lived with him in a $40 million Bahamas penthouse — is expected to provide jurors a fly-on-the-wall account of her ex-beau committing a slew of crimes that could lead to him spending decades behind bars.
The bespectacled, Stanford-educated math whiz has first-hand knowledge of the indicted mogul allegedly stealing billions of dollars from investors in FTX to plug massive losses at the crypto exchange, which was founded in 2019 by Bankman-Fried and Gary Wang and went bankrupt in November 2022, the feds said.
Ellison has pleaded guilty to fraud charges herself related to the alleged theft of FTX customer funds and Alameda’s alleged lies made to lenders. She has been freed on $250,000 bail while she prepares to testify.
Bankman-Fried’s lawyers will surely harp on Ellison’s cooperation deal with the feds and argue that she cannot be trusted because she is diverting attention from her own criminality and has been promised a lighter sentence for testifying, said Fischer, now a defense lawyer at the law firm Moses & Singer.
Yet Ellison’s testimony – and a potential account provided by Wang, who also copped a deal with prosecutors – could still prove vital in explaining to jurors how Bankman-Fried’s alleged crimes unfolded.
“Nothing can substitute for the prosecution having a person say, ‘I was in the room, I saw it happen, and I know it happened because I helped too,’” said Fischer.
“Here’s a senior executive who could say ‘Yes, Sam was in the room with me when he made those decisions,’” Fischer added.
Among the evidence that prosecutors will likely introduce at trial is a recording of a Nov. 9, 2022, meeting in which Ellison admitted to Alameda colleagues that the firm had paid back its lenders by “borrowing” funds that belonged to FTX users.
When asked by a coworker who had authorized using customer deposits for the transactions, Ellison responded “Um... Sam, I guess,” court papers submitted by the feds state.
More than $8 billion worth of customers’ crypto assets vanished in the FTX implosion, federal officials say, including funds reportedly owned by celebrities including Tom Brady, Gisele Bündchen and Stephen Curry.
Ellison already took center stage in the case in August when US District Judge Lewis Kaplanrevoked Bankman-Fried’s bail conditions after the disgraced crypto magnate leaked entries from his ex’s personal diary to a reporter.
The leaks amounted to witness tampering, the judge found, before sending Bankman-Fried from house arrest at his parents’ Palo Alto, Calif. mansion to Brooklyn’s Metropolitan Detention Center – where his lawyers have said he’s been denied his ADHD meds and been served a “flesh diet” rather than the vegan meals he requested.
The upcoming trial will show Bankman-Fried’s stunning fall from grace, from running a crypto platform that at its peak was valued at $32 billion and meeting with dignitaries like former President Bill Clinton and UK Prime Minister Tony Blair to now facing charges that could send him to prison for the rest of his life.
It’s unclear whether Bankman-Fried will take the stand himself – but he’d be wise not to do so even if he’s tempted to tell his side of the story, said Fischer, the former SEC lawyer.
“This is one of those rare cases where the ego of the defendant may lead him to unwisely make the choice to testify in his own defense. If that happens, I think that will probably help the prosecution,” said Fischer.
“This is a young kid who sees convinced of his own brilliance,” Fischer added. “But he comes across poorly, and I don’t know if he understands that.”
