Alameda's Former Boss Takes Stand: Caroline Ellison Reveals SBF's Control Over Fraud Scheme

During today’s court proceedings, Caroline Ellison—SBF’s former girlfriend and ex-head of Alameda Research—delivered testimony that placed direct responsibility on FTX founder Sam Bankman-Fried for orchestrating the massive fraud operation. Her account provides the most damaging insider evidence yet into how the exchange’s sister company systematized the theft of billions from customers.

The Mastermind Behind the Crimes

Ellison testified that she worked at Jane Street before meeting SBF, where they later dated for several years. According to her court statement, SBF was the architect who instructed her to execute the scheme. “He was the one who instigated me to defraud,” Ellison told the judge, explaining that she conspired with other senior executives including former CTO Gary Wang, who has already pleaded guilty.

The scope was staggering: SBF allegedly commanded her to divert billions of dollars directly from FTX clients’ funds into Alameda’s accounts for investment purposes. Rather than a rogue operation, Ellison’s testimony paints a picture of centralized control, with SBF as the decision-maker pulling the strings.

The $14 Billion Hole

The diverted client funds created a massive financial liability. Alameda ultimately accumulated approximately $14 billion in outstanding debt that required repayment to lenders. This wasn’t a temporary accounting quirk—it represented the wholesale theft and misallocation of customer deposits on an almost incomprehensible scale.

Why FTX Collapsed in November

When questioned about FTX’s insolvency last November, Ellison explained the collapse wasn’t mysterious. The exchange couldn’t return funds to users because those assets had already been sent to Alameda to cover debts owed to lenders. In other words, the customer funds that should have been protected were diverted to pay back creditors, leaving no liquidity for the actual account holders.

Caroline Ellison’s testimony—combined with her position as both SBF’s romantic partner and Alameda’s operational head—makes her one of the most credible witnesses that the prosecution has presented. Her insider account directly contradicts any narrative suggesting rogue employees acted without authorization from the top.