Ellison Told FTX Jury Bankman-Fried Directed the Fraud

Caroline Ellison, the former chief executive of Alameda Research, began testifying in Sam Bankman-Fried’s federal criminal trial on October 10, 2023, telling jurors that he directed her to commit crimes involving FTX customer money.

Ellison testified that Alameda ultimately took approximately $14 billion from FTX customers and repaid part of it. She described the money as funding Alameda investments and debt repayments. Her testimony placed Bankman-Fried’s knowledge and instructions at the center of the prosecution’s case over the collapse of the cryptocurrency exchange and its affiliated trading firm.

The testimony was evidence from a cooperating witness, not a verdict. Bankman-Fried had pleaded not guilty, and jurors had not determined his liability on October 10.

What Ellison alleged

Ellison told the court that Alameda had access to a credit line on FTX and could withdraw customer-derived funds without the limitations imposed on ordinary users. She testified that Bankman-Fried instructed Alameda personnel to borrow as much as possible and treated the facility as a source of capital when the trading firm needed money.

According to her testimony, Alameda used billions of dollars outside FTX for investments, loan repayments and other expenditures. The approximately $14 billion figure represented the cumulative amount Ellison said Alameda had taken, not the shortfall remaining when FTX failed. Contemporaneous Axios reporting recorded her explanation that some funds were repaid and that approximately $10 billion remained taken from customers.

Those figures describe different measurements and should not be collapsed into one loss estimate. Approximately $14 billion was the alleged cumulative borrowing; approximately $10 billion was the alleged amount remaining after repayments. Neither figure represented assets recovered in bankruptcy, customer distributions or an event-day valuation of FTX’s estate.

Why her testimony mattered

Ellison had managed the company through which prosecutors alleged FTX customer assets were diverted. She had also pleaded guilty to fraud, conspiracy and money-laundering offenses and agreed to cooperate with the government. That gave her direct knowledge of Alameda’s decisions, but it also gave the defense a basis to challenge her credibility, incentives and allocation of responsibility.

The prosecution needed to prove that Bankman-Fried acted knowingly and with fraudulent intent, rather than merely presiding over poor controls or unsuccessful risk-taking. Ellison’s account directly addressed that requirement: she attributed the borrowing of customer money and major uses of Alameda capital to his instructions.

Her guilty plea established her admissions concerning her own conduct. It did not, by itself, establish Bankman-Fried’s guilt. The government still had to prove every charged offense beyond a reasonable doubt, and the defense retained the right to cross-examine her and present a competing account.

The event-day boundary

At the close of October 10, Ellison had not finished testifying. Her first day on the stand followed testimony from FTX co-founder Gary Wang, another cooperating witness who had described Alameda’s special access to the exchange.

The institutional significance extended beyond the personalities involved. The testimony illustrated how an affiliated trading company’s privileged account settings, opaque borrowing and concentrated decision-making could turn failures of governance into alleged conventional fraud. It also separated the criminal case from broader disputes over whether particular digital assets were securities or commodities: the central issue was the alleged unauthorized use of customer property and whether Bankman-Fried knowingly directed it.

No verdict, sentence, bankruptcy recovery or final loss calculation was knowable from the October 10 record. Those remained unresolved, and this reconstruction does not project any later outcome backward into the trial’s fifth day of testimony.