WHO'S THAT GIRL?!
Sindhu Sundar,Lakshmi Varanasi
Fri, December 16, 2022
Caroline Ellison hasn't been heard from in public since Sam Bankman-Fried was arrested in the Bahamas.MARIO DUNCANSON / Contributor/ Getty Images/ Caroline Ellison's Twitter
Former Alameda CEO Caroline Ellison isn't named in prosecutors' charges against Sam Bankman-Fried
But the SEC's civil suit references her statements on the relationship between FTX and Alameda.
Conspiracy charges and civil claims against SBF show others in the crosshairs, legal experts said.
As Sam Bankman-Fried was taken away in handcuffs, some people who have been watching the implosion of FTX are wondering: Where's Caroline Ellison, his onetime girlfriend who ran his crypto hedge fund Alameda Research?
So far, legal watchers say US prosecutors and regulators have been tight-lipped: The criminal indictment made no mention of Ellison, and the SEC's civil complaint targeted just Bankman-Fried.
But in investigating what US Attorney Damian Williams called "one of the biggest financial frauds in American history," the government is almost certainly looking beyond Bankman-Fried, legal experts said.
"It would not surprise me if Ellison has already spoken with prosecutors," said Renato Mariotti, a partner at Bryan Cave Leighton Paisner, and a former federal prosecutor in Chicago. "And given the situation she's in, she has to be at least considering that move."
No charges or government complaints have been brought against Ellison so far. But her rise as CEO at Alameda, Bankman-Fried's other crypto company separate from FTX, may certainly put her in investigators' sights.
The SEC outlined her tenure at Alameda since she joined in 2018, citing news reports that quoted her as claiming FTX and Alameda were "at arm's length," but then telling Alameda employees last month that the firm's leadership knew it took FTX funds, a detail reported in The Wall Street Journal at the time.
The SEC's complaint on Tuesday claimed that Bankman-Fried "remained the ultimate decision-maker" at Alameda, even after Ellison took over the reins.
US Attorney Damian Williams, who heads the federal prosecutors' office in Manhattan that charged Bankman-Fried, told reporters on Tuesday that investigators are still on the case. Depending on what they uncover, the agency can bring new charges and target other defendants.
There are signs that's coming — the conspiracy counts against Bankman-Fried show that a grand jury already found that prosecutors showed evidence that at least two people agreed to participate in an alleged criminal scheme. Though the indictment offers few insights beyond Bankman-Fried's role, that's not unusual during an ongoing investigation, said Rebecca Mermelstein, a partner at O'Melveny & Myers LLP.
Cooperating witnesses?
It's unclear what kind of charges, if any, Ellison herself may be facing. The conspiracy counts against Bankman-Fried suggest that federal prosecutors may be pursuing others whom they consider to be potential co-conspirators, particularly on counts against him like conspiracy to commit wire fraud, and conspiracy to commit securities fraud.
Those who fear being caught in the government's snare may often cooperate as witnesses in the investigation in hopes of securing some kind of leniency, said Anil Mujumdar, a professor at the University of Alabama school of law, and a former white collar defense attorney.
"Typically, people in her position — if they are aware of misconduct, or even if they may have participated — they can help the government make the case against another defendant by trying to engage in early plea negotiations, and exchange information in return for a potentially lighter sentence," Mujumdar said.
An attorney for Ellison, Stephanie Avakian of the law firm WilmerHale, did not respond to Insider's request for comment Wednesday on the charges against Bankman-Fried, or Ellison's current whereabouts. Until recently, she was living in a luxury penthouse in the Bahamas with Bankman-Fried, and eight other members of his inner circle, according to a report in CoinDesk.
Sam Bankman-Fried joined a New York Times conference by video link before his arrest.Michael M. Santiago/Getty Images
Since Bankman-Fried's crypto empire began unraveling in November however, Ellison has stayed away from the public eye.
That Ellison is being talked about in stories about a large potential fraud is a jarring turn of events for someone who was once vice president of Stanford's Effective Altruism club, where she set her sights on understanding how to allocate money for the betterment of the world.
In fact, she and Bankman-Fried initially bonded over their interest in so-called effective altruism when they first met as colleagues at the trading firm Jane Street Capital. Both had also been raised by university professors. While Bankman-Fried's parents were professors at Stanford Law School, Ellison's were economists based at Massachusetts Institute of Technology.
Once Bankman-Fried had designs on launching his own crypto trading firm, he convinced Ellison to come on board. Ellison was one of his few female colleagues and the two eventually entered into a polyamorous relationship with others in his inner business circle, according to a CoinDesk article that relied on anonymous sources. Bankman-Fried has said he dated Ellison for about six months, but denied having a polyamorous relationship.
Ellison largely remained in the shadow of Bankman-Fried, but officially took over as CEO of Alameda Research in April 2022 after her colleague Sam Trabucco stepped down.
Alameda ex-CEO Caroline Ellison taps SEC's former top crypto regulator as lawyer in FTX investigation
Bethany Biron
Sat, December 10, 2022
Caroline Ellison, left, and Stephanie Avakian, right.Twitter/@carolinecapital, WilmerHale
Caroline Ellison hired Stephanie Avakian and law firm WilmerHale to represent her in the FTX investigation, per Bloomberg.
Avakian was a top regulator at the SEC, where she increased oversight of cryptocurrency.
She also led major cases against companies including Tesla, Theranos, Facebook, and Wells Fargo, among others.
Alameda Research ex-CEO Caroline Ellison has retained a former top cryptocurrency regulator for the US Securities and Exchange Commission as the federal investigation into the downfall of FTX continues.
Bloomberg first reported that Ellison hired Stephanie Avakian, chair of the securities and financial services department at law firm WilmerHale and the SEC's former enforcement director. Sources close to the matter told Bloomberg that Avakian, as well as fellow WilmerHale lawyers, will represent Ellison.
During her tenure at the SEC from 2016 to 2022, Akavian led a team that worked on several high-profile cases against major companies and notable figures. They include Elizabeth Holmes for making fraudlent claims to investors to raise $700 million for Theranos, Elon Musk for tweeting misleading statements about a plan to take Tesla private, and Facebook for misleading investors about the risks of misusing user data.
Akavian was also instrumental in increasing cryptocurrency regulation while at the SEC, leading cases against companies like Robinhood and Ripple Lab.
Avakian and WilmerHale will represent Ellison during the federal probe into her former company, Alameda Research, the trading firm and corporate sibling of fallen cryptocurrency exchange, FTX.
Prior to FTX filing for bankruptcy in November, Alameda borrowed $3.3 billion worth of funds from the cryptocurrency exchange and lent them to FTX founder Sam Bankman-Fried and companies he controlled to cover losses and make risky bets, according to court documents.
Ellison has remained an elusive figure in the collapse of FTX, staying mum and largely unreachable during its downfall. As noted by Bloomberg, while Bankman-Fried has publicly placed blame on Alameda in numerous interviews, Ellison has stayed silent. Some have speculated she may be cutting a deal and cooperating with authorities, according to New York magazine.
The Senate Banking Committee said earlier this week that if Bankman-Fried does not appear before lawmakers next week to testify, he will be subpoenaed.
"As the Founder and CEO of FTX Trading Ltd. at the time of its collapse and the founder, principal owner, and former CEO of Alameda Research, you must answer for the failure of both entities that was caused, at least in part, by the clear misuse of client funds and wiped out billions of dollars owed to over a million creditors," Senate Banking Chairman Sherrod Brow, said in a public statement to the former billionaire on Tuesday.
The Block CEO resigns after reports of undisclosed loans from Alameda Research
Lachlan Keller
Sun, December 11, 2022
Michael McCaffrey, the chief executive officer of cryptocurrency news outlet The Block, resigned after media website Axios reported early Saturday, Hong Kong time, that he had received three undisclosed multi-million dollar loans from Alameda Research, the brokerage arm of failed digital assets exchange FTX.com.
See related article: Disgraced FTX founder SBF to speak at New York Times Dealbook Summit despite controversy
Fast facts
The company’s chief revenue officer, Bobby Moran, will lead the company following McCaffrey’s departure, according to a statement released Saturday.
Moran said that no one outside of McCaffery knew of the three loans totaling US$43 million from February 2021.
McCaffrey’s limited liability company, MJMCCAFFREY LLC, took the first loan of US$12 million from Alameda in 2021 to buy out investors. He chose not to disclose the loan in fear of compromising the news outlet’s objectivity in covering FTX, he claimed in a Twitter thread shortly after the revelation, confirming Axios’ report.
The second loan, worth US$15 million, helped fund day-to-day operations, while a US$16 million third loan was used to buy personal property in the Bahamas, where FTX is based, McCaffrey said.
McCaffrey has also stepped down as the company’s sole board member, which is expanding to three people.
The Block hopes to buy out McCaffrey’s majority stake in the company as part of its restructuring.
Since FTX filed for Chapter 11 bankruptcy in November, its collapse has led to market contagion spreading in the cryptocurrency industry.
See related article: SBF’s parents, FTX executives bought Bahamas property worth US$121 million: Reuters
Sam Bankman-Fried is in jail, but legal watchers are wondering: Where's ex-girlfriend Caroline Ellison?
Sindhu Sundar,Lakshmi Varanasi
Fri, December 16, 2022
Caroline Ellison hasn't been heard from in public since Sam Bankman-Fried was arrested in the Bahamas.MARIO DUNCANSON / Contributor/ Getty Images/ Caroline Ellison's Twitter
Former Alameda CEO Caroline Ellison isn't named in prosecutors' charges against Sam Bankman-Fried
But the SEC's civil suit references her statements on the relationship between FTX and Alameda.
Conspiracy charges and civil claims against SBF show others in the crosshairs, legal experts said.
As Sam Bankman-Fried was taken away in handcuffs, some people who have been watching the implosion of FTX are wondering: Where's Caroline Ellison, his onetime girlfriend who ran his crypto hedge fund Alameda Research?
So far, legal watchers say US prosecutors and regulators have been tight-lipped: The criminal indictment made no mention of Ellison, and the SEC's civil complaint targeted just Bankman-Fried.
But in investigating what US Attorney Damian Williams called "one of the biggest financial frauds in American history," the government is almost certainly looking beyond Bankman-Fried, legal experts said.
"It would not surprise me if Ellison has already spoken with prosecutors," said Renato Mariotti, a partner at Bryan Cave Leighton Paisner, and a former federal prosecutor in Chicago. "And given the situation she's in, she has to be at least considering that move."
No charges or government complaints have been brought against Ellison so far. But her rise as CEO at Alameda, Bankman-Fried's other crypto company separate from FTX, may certainly put her in investigators' sights.
The SEC outlined her tenure at Alameda since she joined in 2018, citing news reports that quoted her as claiming FTX and Alameda were "at arm's length," but then telling Alameda employees last month that the firm's leadership knew it took FTX funds, a detail reported in The Wall Street Journal at the time.
The SEC's complaint on Tuesday claimed that Bankman-Fried "remained the ultimate decision-maker" at Alameda, even after Ellison took over the reins.
US Attorney Damian Williams, who heads the federal prosecutors' office in Manhattan that charged Bankman-Fried, told reporters on Tuesday that investigators are still on the case. Depending on what they uncover, the agency can bring new charges and target other defendants.
There are signs that's coming — the conspiracy counts against Bankman-Fried show that a grand jury already found that prosecutors showed evidence that at least two people agreed to participate in an alleged criminal scheme. Though the indictment offers few insights beyond Bankman-Fried's role, that's not unusual during an ongoing investigation, said Rebecca Mermelstein, a partner at O'Melveny & Myers LLP.
Cooperating witnesses?
It's unclear what kind of charges, if any, Ellison herself may be facing. The conspiracy counts against Bankman-Fried suggest that federal prosecutors may be pursuing others whom they consider to be potential co-conspirators, particularly on counts against him like conspiracy to commit wire fraud, and conspiracy to commit securities fraud.
Those who fear being caught in the government's snare may often cooperate as witnesses in the investigation in hopes of securing some kind of leniency, said Anil Mujumdar, a professor at the University of Alabama school of law, and a former white collar defense attorney.
"Typically, people in her position — if they are aware of misconduct, or even if they may have participated — they can help the government make the case against another defendant by trying to engage in early plea negotiations, and exchange information in return for a potentially lighter sentence," Mujumdar said.
An attorney for Ellison, Stephanie Avakian of the law firm WilmerHale, did not respond to Insider's request for comment Wednesday on the charges against Bankman-Fried, or Ellison's current whereabouts. Until recently, she was living in a luxury penthouse in the Bahamas with Bankman-Fried, and eight other members of his inner circle, according to a report in CoinDesk.
Sam Bankman-Fried joined a New York Times conference by video link before his arrest.Michael M. Santiago/Getty Images
Since Bankman-Fried's crypto empire began unraveling in November however, Ellison has stayed away from the public eye.
That Ellison is being talked about in stories about a large potential fraud is a jarring turn of events for someone who was once vice president of Stanford's Effective Altruism club, where she set her sights on understanding how to allocate money for the betterment of the world.
In fact, she and Bankman-Fried initially bonded over their interest in so-called effective altruism when they first met as colleagues at the trading firm Jane Street Capital. Both had also been raised by university professors. While Bankman-Fried's parents were professors at Stanford Law School, Ellison's were economists based at Massachusetts Institute of Technology.
Once Bankman-Fried had designs on launching his own crypto trading firm, he convinced Ellison to come on board. Ellison was one of his few female colleagues and the two eventually entered into a polyamorous relationship with others in his inner business circle, according to a CoinDesk article that relied on anonymous sources. Bankman-Fried has said he dated Ellison for about six months, but denied having a polyamorous relationship.
Ellison largely remained in the shadow of Bankman-Fried, but officially took over as CEO of Alameda Research in April 2022 after her colleague Sam Trabucco stepped down.
Alameda ex-CEO Caroline Ellison taps SEC's former top crypto regulator as lawyer in FTX investigation
Bethany Biron
Sat, December 10, 2022
Caroline Ellison, left, and Stephanie Avakian, right.Twitter/@carolinecapital, WilmerHale
Caroline Ellison hired Stephanie Avakian and law firm WilmerHale to represent her in the FTX investigation, per Bloomberg.
Avakian was a top regulator at the SEC, where she increased oversight of cryptocurrency.
She also led major cases against companies including Tesla, Theranos, Facebook, and Wells Fargo, among others.
Alameda Research ex-CEO Caroline Ellison has retained a former top cryptocurrency regulator for the US Securities and Exchange Commission as the federal investigation into the downfall of FTX continues.
Bloomberg first reported that Ellison hired Stephanie Avakian, chair of the securities and financial services department at law firm WilmerHale and the SEC's former enforcement director. Sources close to the matter told Bloomberg that Avakian, as well as fellow WilmerHale lawyers, will represent Ellison.
During her tenure at the SEC from 2016 to 2022, Akavian led a team that worked on several high-profile cases against major companies and notable figures. They include Elizabeth Holmes for making fraudlent claims to investors to raise $700 million for Theranos, Elon Musk for tweeting misleading statements about a plan to take Tesla private, and Facebook for misleading investors about the risks of misusing user data.
Akavian was also instrumental in increasing cryptocurrency regulation while at the SEC, leading cases against companies like Robinhood and Ripple Lab.
Avakian and WilmerHale will represent Ellison during the federal probe into her former company, Alameda Research, the trading firm and corporate sibling of fallen cryptocurrency exchange, FTX.
Prior to FTX filing for bankruptcy in November, Alameda borrowed $3.3 billion worth of funds from the cryptocurrency exchange and lent them to FTX founder Sam Bankman-Fried and companies he controlled to cover losses and make risky bets, according to court documents.
Ellison has remained an elusive figure in the collapse of FTX, staying mum and largely unreachable during its downfall. As noted by Bloomberg, while Bankman-Fried has publicly placed blame on Alameda in numerous interviews, Ellison has stayed silent. Some have speculated she may be cutting a deal and cooperating with authorities, according to New York magazine.
The Senate Banking Committee said earlier this week that if Bankman-Fried does not appear before lawmakers next week to testify, he will be subpoenaed.
"As the Founder and CEO of FTX Trading Ltd. at the time of its collapse and the founder, principal owner, and former CEO of Alameda Research, you must answer for the failure of both entities that was caused, at least in part, by the clear misuse of client funds and wiped out billions of dollars owed to over a million creditors," Senate Banking Chairman Sherrod Brow, said in a public statement to the former billionaire on Tuesday.
The Block CEO resigns after reports of undisclosed loans from Alameda Research
Lachlan Keller
Sun, December 11, 2022
Michael McCaffrey, the chief executive officer of cryptocurrency news outlet The Block, resigned after media website Axios reported early Saturday, Hong Kong time, that he had received three undisclosed multi-million dollar loans from Alameda Research, the brokerage arm of failed digital assets exchange FTX.com.
See related article: Disgraced FTX founder SBF to speak at New York Times Dealbook Summit despite controversy
Fast facts
The company’s chief revenue officer, Bobby Moran, will lead the company following McCaffrey’s departure, according to a statement released Saturday.
Moran said that no one outside of McCaffery knew of the three loans totaling US$43 million from February 2021.
McCaffrey’s limited liability company, MJMCCAFFREY LLC, took the first loan of US$12 million from Alameda in 2021 to buy out investors. He chose not to disclose the loan in fear of compromising the news outlet’s objectivity in covering FTX, he claimed in a Twitter thread shortly after the revelation, confirming Axios’ report.
The second loan, worth US$15 million, helped fund day-to-day operations, while a US$16 million third loan was used to buy personal property in the Bahamas, where FTX is based, McCaffrey said.
McCaffrey has also stepped down as the company’s sole board member, which is expanding to three people.
The Block hopes to buy out McCaffrey’s majority stake in the company as part of its restructuring.
Since FTX filed for Chapter 11 bankruptcy in November, its collapse has led to market contagion spreading in the cryptocurrency industry.
See related article: SBF’s parents, FTX executives bought Bahamas property worth US$121 million: Reuters
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