Sam Bankman-Fried thought he had 5% chance of becoming president, ex-girlfriend says

Caroline Ellison said Bankman-Fried was responsible for fraud.

October 10, 2023, 3:23 PM

Disgraced crypto executive Sam Bankman-Fried thought there was a "5% chance he would become president," his ex-girlfriend testified Tuesday at his federal criminal trial.

Caroline Ellison, one of the government's star witnesses, said she and the 31-year-old Bankman-Fried "started sleeping together on and off" in 2018 and dated in subsequent years.

During their relationship, Ellison said Bankman-Fried would describe his business, and political, ambitions.

Ellison also testified she committed crimes with Bankman-Fried. She pleaded guilty and is testifying pursuant to a cooperation agreement with federal prosecutors in New York, who have accused him of, among other things, illegally using FTX customer and investor money to cover speculative investments by his privately controlled hedge fund Alameda Research.

"He said that FTX would be a good source of capital and he set up the system that allowed Alameda to borrow from FTX," Ellison said.

In the summer of 2021, Ellison became co-chief executive of Alameda Research, feeling "not particularly" equipped for the job, she testified Tuesday.

PHOTO: Former crypto hedge fund Alameda Research CEO Caroline Ellison finds and points out Sam Bankman-Fried during Bankman-Fried's fraud trial over the collapse of FTX, the bankrupt cryptocurrency exchange, in New York City, Oct. 10, 2023.
Former crypto hedge fund Alameda Research CEO Caroline Ellison finds and points out Sam Bankman-Fried during Bankman-Fried's fraud trial over the collapse of FTX, the bankrupt cryptocurrency exchange, at Federal Court in New York City, Oct. 10, 2023, in this courtroom sketch.
Jane Rosenberg/Reuters

For big decisions, "I would always ultimately defer to Sam," because he owned the company and set her compensation.

Bankman-Fried wanted to put some distance between himself and Alameda because some FTX customers expressed concern FTX and Alameda's relationship was too close, Ellison said.

At the time, the two were "on a break" from their dating relationship, which she said resumed a few months later. The romantic relationship ended in 2022.

"I felt like he wasn't paying much attention to me or spending much time with me in the relationship," Ellison said.

As co-CEO, Ellison made an annual salary of $200,000 with bonuses twice a year ranging from $100,000 to $20 million. She was never given an equity stake in Alameda despite asking for it, she said.

PHOTO:FTX founder Sam Bankman-Fried leaves Manhattan federal court, June 15, 2023, in New York.
FTX founder Sam Bankman-Fried leaves Manhattan federal court, June 15, 2023, in New York.
Bebeto Matthews/AP, FILE

Asked if FTX customers were told how their money was being put to use, Ellison responded, "Not to my knowledge."

She estimated $10 billion to $20 billion in FTX money was transferred to Alameda.

"I was somewhat concerned because a lot of these loans seemed to be going to illiquid things," Ellison testified, adding Bankman-Fried directed all lending and investing strategies.

Ellison said Bankman-Fried also used customer money to make political donations because he believed he would reap "very high returns in terms of influence" for relatively small amounts of money. She cited a $10 million donation to President Joe Biden that Bankman-Fried believed would bring "influence and recognition."

FTX marketed itself as a safe, reliable cryptocurrency exchange, but Ellison testified it was not because transferring all that money to Alameda "meant those assets were at risk."

Bankman-Fried has pleaded not guilty to all counts. If convicted, he could face a sentence of up to 110 years in prison.

PHOTO: Former crypto hedge fund Alameda Research CEO Caroline Ellison arrives to testify at the trial of former FTX Chief Executive Sam Bankman-Fried, at Federal Court in New York City, Oct. 10, 2023 in this still image from video.
Former crypto hedge fund Alameda Research CEO Caroline Ellison arrives to testify at the trial of former FTX Chief Executive Sam Bankman-Fried, who is facing fraud charges over the collapse of the bankrupt cryptocurrency exchange, at Federal Court in New York City, Oct. 10, 2023 in this still image from video.
Reuters TV via Reuters

In an interview with ABC News' George Stephanopoulos in November 2022, Bankman-Fried denied knowing "there was any improper use of customer funds."

"I really deeply wish that I had taken like a lot more responsibility for understanding what the details were of what was going on there," Bankman-Fried said at the time. "A lot of people got hurt, and that's on me."

ABC News' Max Zahn contributed to this report.

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