Former FTX executive Caroline Ellison, the government’s star witness against Sam Bankman-Fried, took the stand Tuesday and accused him of orchestrating fraud at the cryptocurrency exchange.
“He directed me to commit these crimes,” Ellison — who last year agreed to a deal with prosecutors in which she pleaded guilty to charges including wire fraud, securities fraud and commodities fraud — told the court.
Viewed as key in making a criminal case stick against her one-time romantic partner, Ellison formerly ran Alameda Research, a sister hedge fund to FTX, the crypto currency platform co-founded by Bankman-Fried. Ellison pleaded guilty and agreed to cooperate with federal prosecutors after FTX imploded last year.
Alameda “ultimately took around $14 billion, some of which we were able to pay back,” Ellison testified.
Asked to identify Bankman-Fried, Ellison stood and took a while, before finding and confirming his presence in the courtroom. Her testimony was brief, lasting about 10 minutes, before the judge announced a break for lunch. Ellison’s testimony was to resume Tuesday afternoon.
Bankman-Fried, 31, is accused of funneling billions of dollars from FTX to Alameda, allegedly using as much as $10 billion in customer deposits to cover luxury real estate purchases and large political donations. He has pleaded not guilty and faces a potential prison term of more than a century if convicted of federal fraud and money-laundering charges.
“He had wealth, he had power, he had influence, but all of that was built on lies,” Assistant U.S. Attorney Thane Rehn said.
FTX collapsed over a four-day period in November, and Bankman-Fried was arrested in the Bahamas the following month.
Ellison was called to the stand after Gary Wang, FTX co-founder, completed his testimony.
Wang, who also pleaded guilty and agreed to cooperate with prosecutors, testified last week that Bankman-Fried tweeted assurances that FTX was in good shape, even as the exchange was unraveling.
The defense is expected to make the case that Bankman-Fried misstepped, but his mistakes were not intentional and don’t rise to the level of fraud.
“Sam didn’t intend to defraud anyone,” Mark Cohen, Bankman-Fried’s attorney, said, casting his client as a nerd whose business was taken down in a crypto crash that also demolished other startups.
The son of Stanford University law school professors, Bankman-Fried has been jailed in Brooklyn for more than a month after his bail was revoked by the judge hearing the case, who ruled he had tried to interfere with witnesses.
—CBS News’ Cassandra Gauthier contributed to this report.
