Caroline Ellison has apologized for stealing billions in customer deposits at crypto exchange platform FTX to make bets at Alameda Research, the hedge fund she ran.
“‘I am truly sorry for what I did.’”
— Caroline Ellison, former head of Alameda Research
Ellison made her comments in front of a judge in New York federal court, as she pleaded guilty to helping Sam Bankman-Fried make away with billions in customer funds while misleading investors and lenders and playing down the risk of their crypto trading platform.
“‘I knew that it was wrong.’”
Along with Ellison, Zixiao “Gary” Wang, a former FTX chief technology office and co-founder, 29, pleaded guilty Monday this week during separate hearings.
Federal authorities and regulators are making the case that Wang wrote software code, at Bankman-Fried’s behest, to create backdoors into FTX’s systems that allowed Ellison’s Alameda access to customer money and prop up FTX’s own token, FTT.
The pair each potentially face decades in prison sentences if convicted after pleading guilty to charges that included wire fraud, securities and commodities fraud in exchange for leniency.
Both have agreed to cooperate with authorities to lay the groundwork for Bankman-Fried’s own case as the alleged brains behind of one of the biggest crypto frauds in recent memory.
On Thursday, Bankman-Fried was released from custody on a $250 million bond, following his first appearance in a U.S., court on fraud charges.
FTX filed for bankruptcy on Nov. 11 when Bankman-Fried was ousted from the company he co-founded in 2019.
The collapse of FTX was, perhaps, hastened by its competitor, Binance, who announced it was unloading $500 million in FTT tokens in November due to “recent revelations that have come to light” about the company’s books. That triggered mass redemptions by depositors, which FTX couldn’t meet.
Ellison is a Stanford University graduate who grew up in the suburbs of Boston, the daughter of two MIT economists, according to the Wall Street Journal. After graduation, she worked at quantitative trading firm Jane Street, where she met fellow trader Bankman-Fried. She was rumored to be in a relationship with Bankman-Fried, who is an MIT grad, according to reports.