Caroline Ellison says she and Sam Bankman-Fried lied for years

During her second day of testimony at the FTX founder's trial, Ms. Ellison said she misled lenders and circulated false financial documents at the request of Mr. Bankman-Fried.

Caroline Ellison, a top advisor to cryptocurrency mogul Sam Bankman-Fried, testified Wednesday that she repeatedly lied at his request, misleading the public about its activities. and circulating “dishonest” financial documents to cryptocurrency lenders.

At the time Mr. Bankman-Fried’s two companies – FTX, a digital currency exchange , and Alameda Research, a hedging company - collapsed in November, the lies had become too much to bear, Ms. Ellison said, and the implosions were almost cathartic.

"Overall, this was the worst week ever. my life,” said Ms. Ellison, 28, fighting back tears as she recounted the frenzied week in which businesses went bankrupt. "I felt this sense of relief that I no longer had to lie and could start taking responsibility even though I felt indescribably bad."

Mrs. Ellison's testimony, on his second day on the witness stand, was the most emotional moment in Mr. Bankman-Fried's fraud trial so far. She was widely considered the government's star witness, in part because she dated Mr. Bankman-Fried on and off for years, giving him unique access to the FTX founder as his crypto empire grew. His trial in Manhattan federal court has become a referendum on high-risk practices in the crypto industry that led to billions of dollars in losses last year.

In the courtroom, Mr. Bankman-Fried, 31, visibly did not react to Ms. Ellison's testimony. During a break in the proceedings, he glanced at a group of reporters seated in the gallery and raised his eyebrows.

Mr. Bankman-Fried was tasked with orchestrating a project to turn FTX into his personal piggy bank. Authorities say he stole up to $10 billion from FTX clients to fund venture capital investments, buy luxury real estate, make campaign donations and pay off Alameda lenders. p>

MS. Ellison, who was Alameda's chief executive, said she was one of Mr. Bankman-Fried's main accomplices in funneling FTX client funds into Alameda's coffers. In December, she pleaded guilty to fraud and conspiracy and agreed to cooperate with prosecutors in exchange for leniency. Gary Wang and Nishad Singh, two senior FTX executives, have also pleaded guilty and are cooperating with the government.

Mr. Bankman-Fried has pleaded not guilty to seven charges, including one charge of defrauding lenders. He could face what would amount to a life sentence if convicted.

Since the collapse of FTX, Ms. Ellison has been the subject of 'much more public scrutiny than either of the other two. cooperating witnesses. She and Mr. Bankman-Fried lived together in the Bahamas, where FTX was based, and shared a turbulent office romance as FTX grew into a $32 billion crypto giant. On Tuesday, Ms. Ellison recounted intimate details of the relationship, including the tensions she caused at work and her own concerns about Mr. Bankman-Fried's feelings toward her.

When After returning to the stand on Wednesday, Ms. Ellison traced the history of FTX's financial problems. She told jurors the exchange began to collapse in the spring of 2022, when the crypto market collapsed.

Ms. Ellison said she kept detailed spreadsheets showing how much Alameda owed its lenders and how much it relied on deposits from FTX customers...