Three months before the cryptocurrency market imploded last year, Caroline Ellison, the 27-year-old CEO of crypto hedge fund Alameda Research, was wracked with self-doubt.
“I feel quite unhappy and overwhelmed with my job,” Ms Ellison wrote in a Google Doc in February 2022. She added: “At the end of the day I can’t wait to get home and turn off my phone and have a drink and get away from it all.”
Mrs. Ellison had a lot on her mind. She didn’t think she was well suited to lead Alameda or was a particularly decisive leader, she wrote in another Google doc. She also went through a split with Sam Bankman-Fried, the billionaire entrepreneur who founded Alameda and then FTX, one of the world’s largest cryptocurrency exchanges. They had dated occasionally, and Mrs. Ellison worried about “making things weird” and “causing drama.”
“It doesn’t really feel like there’s an end in sight,” she wrote in the February 2022 document.
Now Ms Ellison is about to be a key witness at Mr Bankman-Fried’s criminal trial, scheduled for October 2.
Mr. Bankman-Fried, 31, is charged with misappropriating billions of dollars withdrawn from customer accounts and faces eight counts of fraud and electoral violations. His spectacular demise, which bankrupted FTX and Alameda, transformed Ms. Ellison from a powerful — but relatively private — figure into a target of tabloid speculation. In December, she pleaded guilty to fraud charges and agreed to cooperate with federal prosecutors investigating her ex-boyfriend.
His case rushes to a courtroom confrontation in Manhattan. Two other top FTX executives, Nishad Singh and Gary Wang, also pleaded guilty and agreed to cooperate. In June, after weeks of legal wrangling over the charges against Mr Bankman-Fried, the judge in the case laid out a lively schedule ahead of the trial, asking prosecutors to provide a witness list and other final material to discuss. . Prosecutors are expected to begin preparing at least some witnesses in August, two people with knowledge of the matter said.
As Mr. Bankman-Fried’s girlfriend and one of his first hires, Ms. Ellison had a unique insight into the founder of FTX. She also recorded many of her thoughts in writing, making observations about her personal and professional life in a handwritten journal and on Google docs that have been distributed to lawyers involved in the case, according to documents reviewed by The New York Times and four people. who are familiar with the research.
The documents, previously unreported, offer new insight into Ms. Ellison’s psychology during FTX’s final months. Ms. Ellison, now 28, was a prolific writer whose Tumblr posts about Harry Potter and Jane Austen were widely dissected. But the Google Docs are more personal and raw, some addressed directly to Mr. Bankman-Fried, illustrating the complexities of their relationship and her ambivalence about Alameda.
In a Google doc addressed to Mr Bankman-Fried in April 2022, Ms Ellison wrote that a previous breakup with him had “significantly reduced my excitement about Alameda”. Life at the hedge fund, she added, “felt too tied to you in a way that was painful.”
A representative of Ms Ellison’s legal team and a lawyer for Mr Bankman-Fried declined to comment. A spokesman for the United States Attorney’s Office for the Southern District of New York in Manhattan, the unit prosecuting the case, also declined to comment.
Mrs. Ellison, a Stanford graduate, taught Mr. Knowing Bankman-Fried at Jane Street, the quantitative trading firm where he worked after college. They shared a commitment to effective altruism, the charitable movement that has gained followers in the tech and finance industries.
After Mr. Bankman-Fried left Jane Street to found Alameda in 2017, he recruited Ms. Ellison as a trader. In 2021, he promoted her to co-chief executive alongside another early hire, Sam Trabucco.
Mr. Bankman-Fried and Mrs. Ellison also began a rocky romantic relationship, with multiple breakups and reconciliations. Sometimes Mrs. Ellison worried that Mr. Bankman-Fried didn’t think she was good enough. When he was around, she wrote in the February 2022 Google Doc, she had “an instinct to shrink and get smaller and quieter and procrastinate to others.”
After a breakup, Mrs. Ellison cut off communication with Mr. Bankman-Fried. “I felt quite hurt/rejected,” she wrote in the April 2022 Google Doc. “Not giving you the contact you wanted felt like the only way to regain a sense of power.”
Last year, Mr. Bankman-Fried had become one of the world’s most prominent crypto entrepreneurs, his face plastered on billboards and magazine covers. His fame seemed to make life at FTX and Alameda more difficult for Ms. Ellison.
Staying in place meant “having to be around you all the time, hearing people talk about how good you are all the time,” she wrote in the April 2022 document.
Ms. Ellison was compensated far less generously than other top executives at FTX and Alameda, though it’s unclear if she was aware of this. According to court documents, the exchange’s founders and other key employees received $3.2 billion in payments and loans. Of that total, $6 million went to Ms. Ellison, compared to $587 million for Mr. Singh, FTX’s chief of engineering, and $246 million for Mr. Wang, one of the founders. Mr. Bankman-Fried received $2.2 billion.
In May 2022, the crypto market crashed, driving up coin prices and bankrupting several prominent companies. During the crisis, regulators have alleged that Mr. Bankman-Fried, Mr. Wang, Mr. Singh and Ms. Ellison filled a hole in Alameda’s accounts with billions in customer funds deposited with FTX.
Even before that, Mrs. Ellison doubted her own abilities. In the April 2022 document, she listed areas she struggled with, including “leadership” and “decisiveness.”
“Running Alameda doesn’t feel like something I am relatively advantaged in or very well suited to do,” she wrote.
Last fall, Mr. Bankman-Fried lost faith in Alameda. He considered closing the company, according to court documents, and invested more than $400 million in another trading company, Modulo Capital, which was run by another former Jane Street trader whom he had also dated.
Ms. Ellison expressed jealousy and resentment towards Modulo in some of her writings, as well as feeling she was being squeezed out, two people who saw the documents said.
Mr Bankman-Fried’s business empire collapsed in November after a run on deposits revealed an $8 billion shortfall.
“I just had a growing fear of this day weighing on me,” Ms Ellison wrote to him that month in a message, which was taken from the court records. “Now that it’s actually happening, it feels great to have it behind us.”
In December, Mr. Bankman-Fried was arrested in the Bahamas, where FTX was based, and taken to a prison not far from the luxury penthouse he and Mrs. Singh. Mr. Bankman-Fried is now under house arrest at his parents’ home in Palo Alto, California.
People who know Ms. Ellison say they are struck by her sincerity and her willingness to admit her own shortcomings. In court in December, she said she was “really sorry” for committing fraud. “I knew it was wrong,” she said.
Ms Ellison is expected to repeat that claim at Mr Bankman-Fried’s trial, which is expected to last four or five weeks. Much of the process will revolve around messages Mr Bankman-Fried and the three associates exchanged on messaging app Signal, two people briefed on the matter said.
As a woman in the male-dominated crypto industry, Ms. Ellison may seem more sympathetic to the jury than the other associates, according to attorneys familiar with the case. In interviews last year, Mr. Bankman-Fried put some of the blame for the collapse on Alameda, saying he had little involvement in the hedge fund’s day-to-day management.
Moira Penza, a former federal prosecutor, said the top government officials took the blame on the witness stand and that the “power difference” between Ms Ellison and Mr Bankman-Fried could make her a compelling voice.
“This does not seem to me to be an effective strategy for the defendant to blame,” Ms Penza said. “Especially with someone who was once a romantic partner.”