Three months before the cryptocurrency market crashed last year, Caroline Ellison, the 27-year-old CEO of Alameda Research cryptocurrency hedge fund, was wracked with doubts.
“I have been quite unhappy and overwhelmed with my job,” Ms. Ellison wrote in a Google Doc in February 2022. She added: “At the end of the day, I can’t wait to go home, turn off my phone, have a drink, and get away from it all.”
Mrs. Ellison had a lot on her mind. She did not believe that she was well equipped to lead Alameda or that she would be a particularly decisive leader, she wrote in another Google document. She was also going through a breakup with Sam Bankman-Fried, the billionaire businessman who had founded Alameda and later FTX, one of the world’s largest cryptocurrency exchanges. They had dated from time to time, and Ellison was concerned about “doing weird” and “causing drama.”
“There really doesn’t seem to be an end in sight,” he wrote in the February 2022 document.
Now, Ellison is set to be a star witness in Bankman-Fried’s criminal trial, which is scheduled for October 2.
Mr. Bankman-Fried, 31, is charged with embezzling billions of dollars taken from client accounts and faces eight counts of fraud and election law violations. His spectacular fall, which bankrupted FTX and Alameda, transformed Ms. Ellison from a powerful but relatively private figure into a target of sensational speculation. In December, she pleaded guilty to fraud charges and agreed to cooperate with federal prosecutors investigating his ex-boyfriend.
Their case is moving toward a showdown in Manhattan court. Two other top FTX executives, Nishad Singh and Gary Wang, have also pleaded guilty and agreed to cooperate. In June, after weeks of legal wrangling over the charges against Mr. Bankman-Fried, the judge in the case set a quick schedule for the pre-trial period, asking prosecutors to draw up a witness list and produce other final materials. Prosecutors are expected to start preparing at least some witnesses in August, two people with knowledge of the matter said.
As Mr. Bankman-Fried’s girlfriend and one of his first hires, Ms. Ellison had a unique insight into the founder of FTX. He also recorded many of his thoughts in writing, making observations about his personal and professional life in a handwritten journal and in Google Docs that have been circulated among attorneys involved in the case, according to documents reviewed by The New York Times and four people familiar with the investigation.
The documents, which have not been previously reported, offer a new perspective on the psychology of Ms. Ellison during the final months of FTX. Ms. Ellison, now 28, was a prolific writer whose Tumblr posts on Harry Potter and Jane Austen have been widely dissected. But the Google documents are more personal and raw, with some directed directly at Mr. Bankman-Fried, illustrating the complexity of their relationship and his ambivalence about Alameda.
In a Google document addressed to Mr. Bankman-Fried in April 2022, Ms. Ellison wrote that a previous break with him had “significantly dampened my enthusiasm for Alameda.” Life at the hedge fund, she added, “felt too associated with you in a painful way.”
A representative of Ms. Ellison’s legal team and a lawyer for Mr. Bankman-Fried declined to comment. A spokesman for the US Attorney’s Office for the Southern District of New York in Manhattan, the unit prosecuting the case, also declined to comment.
Ms. Ellison, a Stanford graduate, met Mr. Bankman-Fried at Jane Street, the quantitative trading firm where she worked after college. They shared a commitment to effective altruism, the charitable movement that has won converts in the tech and financial industries.
After Mr. Bankman-Fried left Jane Street to start Alameda in 2017, he recruited Ms. Ellison as a merchant. In 2021, he promoted her to co-CEO, along with another early hire, Sam Trabucco.
Mr. Bankman-Fried and Ms. Ellison also began a rocky romantic relationship, with multiple breakups and reconciliations. Sometimes Ellison worried that Bankman-Fried would think she wasn’t good enough. When he was around her, she wrote in the February 2022 Google Doc, she had “an instinct to shrink back and become smaller and quieter and respect others.”
After a separation, Ms. Ellison cut off communication with Mr. Bankman-Fried. “I felt quite hurt/rejected,” she wrote in the April 2022 Google Doc. “Not giving you the contact you wanted felt like the only way I could regain a sense of power.”
By the past year, Mr. Bankman-Fried had become one of the world’s most prominent crypto entrepreneurs, with his face plastered on billboards and magazine covers. His fame seemed to make life more difficult for Ms. Ellison at FTX and Alameda.
Staying meant “having to be around you all the time, listening to people talk about how great you are all the time,” he wrote in the April 2022 document.
Ms. Ellison was compensated much less generously than other top executives at FTX and Alameda, though it’s unclear if she was aware of it. According to court documents, the exchange’s founders and other key employees received $3.2 billion in payments and loans. Of that total, $6 million went to Ms. Ellison, compared with $587 million for Mr. Singh, FTX’s chief engineer, and $246 million for Mr. Wang, one of the founders. Mr. Bankman-Fried received $2.2 billion.
In May 2022, the crypto market crashed, sending coin prices skyrocketing and plunging several prominent companies into bankruptcy. During the crisis, regulators have claimed that Mr. Bankman-Fried, Mr. Wang, Mr. Singh and Ms. Ellison filled a hole in Alameda’s accounts using billions in client funds on deposit with FTX.
Even before that, Ms. Ellison doubted her own abilities. In the April 2022 document, she listed areas where she struggled, including “leadership” and “decisiveness.”
“Running Alameda doesn’t feel like something I’m so comparatively advantageous or well prepared to do so,” he wrote.
By last fall, Bankman-Fried had lost faith in Alameda. He considered closing the company, according to court records, and invested more than $400 million in another business venture, Modulo Capital, which was run by a different former Jane Street merchant whom he had also dated.
Ms Ellison expressed jealousy and resentment towards Modulo in some of her writing, as well as a feeling that she was being ousted, said two people who saw the documents.
The Bankman-Fried business empire collapsed in November after a run on deposits exposed an $8 billion deficit.
“I had a growing fear of this day weighing on me,” Ms. Ellison wrote to him in a message that month, which was excerpted from court records. “Now that it’s actually happening, it feels great to be done with it.”
In December, Mr Bankman-Fried was arrested in the Bahamas, where FTX was based, and taken to a prison not far from the luxury penthouse he and Ms Ellison had shared with eight other roommates, including Mr Wang and Mr Singh. Mr. Bankman-Fried is now under house arrest at his parents’ home in Palo Alto, California.
People who know Ms. Ellison say they have been struck by her seriousness and willingness to admit her own failings. In court in December, she said she was “really sorry” for committing fraud. “I knew it was wrong,” she said.
Ellison is expected to repeat that claim in the Bankman-Fried trial, which is expected to last four to five weeks. Much of the trial will revolve around messages Bankman-Fried and the three aides exchanged on the Signal messaging app, two people briefed on the matter said.
As a woman in the male-dominated crypto industry, Ms. Ellison may seem more sympathetic to the jury than the other cooperators, lawyers familiar with the case said. in interviews last yearBankman-Fried placed some of the blame for the collapse on Alameda, saying it had little involvement in the hedge fund’s day-to-day management.
Moira Penza, a former federal prosecutor, said the government’s best aides accept blame on the witness stand and that the “power difference” between Ms Ellison and Mr Bankman-Fried could make her a compelling voice.
“This does not strike me as an effective strategy to place blame on the defendant,” Penza said. “Especially with someone who was once a romantic partner.”