Several figures have occupied the spotlight in the collapse’s aftermath of the cryptocurrency exchange FTX. Most notably, ex-CEO Sam Bankman-Fried has been blamed for much of the company’s mismanagement and potential malfeasance. Media outlets, including SlashBeats, have also reported on John J. Ray III, the exchange’s new CEO, an insolvency expert tasked with sorting out the mess.
However, a key figure in the disaster has wisely remained silent. Caroline Ellison, the former CEO of the quantitative trading firm Alameda Research, is central to the FTX story. Bankman-Fried founded Alameda and, despite shifting his focus to FTX, appears to have continued to have free access to its funds. According to CoinDesk’s anonymous sources, Ellison and Bankman-Fried were romantically involved at various points during their working relationship.
So, who is Ellison? What role does she play in FTX? Here’s what we know.
According to Business Insider, Ellison has done the sensible thing in the face of such a disaster: she has removed her public persona from the Internet and gone silent. What we know about her stems primarily from her pre-FTX life and the scant information available on her online presence.
Ellison, a Stanford graduate, began her career as a trader at Jane Street, the same quantitative trading firm where Sam Bankman-Fried began. Ellison had only been there for 19 months when Bankman-Fried hired her for Alameda Research (via eFinancialCareers). While her initial role was unclear, according to Ellison and others, SBF was “cagey” about details in his businesses, a habit that has since backfired. As of October 2021, she was co-CEO and sole owner.
From then on, things became more eventful and complicated for FTX and Alameda Research. Both moved to the Bahamas, a country known for its crypto-friendly legislation. Both companies’ executives had an unusual working and personal arrangement: up to nine high-level FTX and Alameda employees cohabited and worked from a resort on the tiny island of New Providence. Stimulants appeared to be popular. On Twitter, SBF famously described his workday as “stimulants when you wake up, sleeping pills if you need them when you sleep.” Regarding Ellison:
While they portrayed the collapse of FTX as a sudden disaster, with only “8 days in November” between thriving and bankrupt, warning signs had been ringing for some time. Concerns about FTX’s suspiciously close financial relationship with Alameda have haunted the company since its inception. According to the Wall Street Journal, Alex Pack of Dragonfly Investing made an offer to Bankman-Fried, only to be told that Dragonfly’s money would only be accepted if it supported Alameda’s new cryptocurrency exchange, the nascent FTX. Pack stated:
“Suggesting that we use our money if we were to invest, to finance his new business at the expense of the business we were investing in — that left a pretty sour taste in our mouths.”
Bankman-Fried was the CEO of Alameda. In some ways, he seems to have never left. According to the Journal, Alameda was exempt from FTX’s so-called “risk engine,” an algorithm that served as FTX’s primary safeguard against bad debts. Alameda blew right past the safeguard, lending to and borrowing from FTX without hesitation.
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When everything came crashing down, Alameda Research owed FTX $10 billion. What about Ellison? Choose your story. According to the New York Times, she is a key figure in the FTX scandal. The Intelligencer portrays her as yet another victim of Bankman-predatory Fried’s behavior, a convenient surrogate to blame. Which story is true will have to wait until Ellison speaks out about the scandal.