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Why Sam Bankman-Fried has ‘no easy path’ after Caroline Ellison’s possible flip

Disgraced crypto-bro Sam Bankman-Fried has “no easy path” forward after his ex-girlfriend Caroline Ellison appears to have flipped on him by co-operating with the feds.

Ellison, 25, is the former CEO of Bankman-Fried’s crypto hedge fund company Alameda Research and has intimate knowledge of what happened ahead of FTX’s sudden bankruptcy in November, which quickly led to charges against her ex of defrauding investors of $1.8 billion.

Manhattan US Attorney Damian Williams announced Wednesday math whizz and Harry Potter fan Ellison and Gary Wang, a co-founder of FTX had pleaded guilty to fraud.

Ellison’s charging documents show she could face up to 110 years in prison, but legal experts claim with cooperation, she could get a much more lenient sentence and save her own bacon.

“Almost invariably, people say, ‘At the end of the day, I have to look out for my interest or my family’s interest. Even if I don’t relish what I’m being asked to do,” Jack Sharman, a white-collar criminal defense attorney for Lightfoot, Franklin and White, told The Post.

Caroline Ellison.
Caroline Ellison appears to have flipped on Bankman-Fried
Twitter / @carolinecapital

Since the FTX scandal broke, Ellison — daughter of a Massachusetts Institute of Technology economics professor — has attempted to keep a low profile, only allegedly surfacing publicly once to grab a coffee in New York City on Dec. 4.

Previously, Stanford graduate Ellison had lived between the Bahamas, where FTX rented an ultra-luxurious penthouse and Hong Kong where she, Bankman-Fried and a group of their friends had moved to trade crypto in 2018.

Sam Bankman-Fried leaves Manhattan Federal Court on Dec. 22.
Sam Bankman-Fried leaves Manhattan Federal Court on Dec. 22.
Matthew McDermott

It’s unknown how long she dated Bankman-Fried for or when, but Tumblr posts credited to her suggest at one point she was dabbling in polyamory.

“When I first started my foray into poly, I thought of it as a radical break from my trad past,” Ellison allegedly wrote in the Tumblr entry, according to the Daily Mail. “But tbh I’ve come to decide the only acceptable style of poly is best characterized as something like ‘imperial Chinese harem.’”

Gary Wang.
Gary Wang.

She added: “None of this non-hierarchical bulls–t; everyone should have a ranking of their partners, people should know where they fall on the ranking, and there should be vicious power struggles for the higher ranks.”

Now it seems any power struggle is over, and Bankman-Fried is left staring down a combined 115-year sentence for charges of fraud, money laundering and campaign finance violations. Prosecutors allege he illegally used billions of investors’ money to buy real estate, fund his trading firm Alameda Research and make political donations. He is set to be placed under house arrest as he awaits trial after his record-breaking $250 million bond was set Thursday.

Bankman-Fried “is taking on water, quick, and a life raft appears nowhere in sight,” Michael Weinstein, a former federal prosecutor and white-collar defense attorney at Cole Schotz told The Post. 

“That is as a consequence of the recent play by both Ellison and Wang — because they will undermine likely many of his defenses or arguments that they were in charge or were doing things without his knowledge,” he said.

During Bankman-Fried’s hearing in Manhattan federal court Thursday, Assistant US Attorney Nick Roos said that the evidence to be presented at his trial would include “multiple cooperating witnesses,” dozens of FTX employees and tens of thousands of pages of company documents.

Caroline Ellison
Since the FTX scandal broke, Ellison has attempted to keep a low profile.

“His statements are going to be undermined by the electronic evidence, as well as cooperating witnesses,” Weinstein said. 

Because both employees and key members of his inner circle turned on him, “there’s no easy path here,” said Sharman.

The feds have likely engineered Ellison and Wang’s plea deals “to highly incentivize the people who have pled to cooperate vigorously, and to support the government’s efforts in any way possible,” Sharman explained. 

Now, Bankman-Fried appears to be the federal government’s main target.

The fallen CEO’s situation is bad enough that if prosecutors do offer him a plea deal, it might not be much better than taking your chances at a trial, Sharman surmised.

Weinstein said if Bankman-Fried was his client, he’d press him on what Ellison and Wang might be telling prosecutors.

Sam Bankman-Fried outside of Manhattan Federal Court on December 22
Sam Bankman-Fried outside of Manhattan Federal Court on Dec. 22
Matthew McDermott

“I always asked the question: If someone turned on you, what’s the worst thing they could say? What would your coworker say? What would your number two or number three in the organization say about you?”

Judging by Ellison’s previous closeness to Bankman-Fried, the evidence she would likely be able to provide — such as the contents of a group chat they allegedly shared called “Wirefraud” — could be legal dynamite.

Echoing Sharman’s sentiment, Weinstein added: “It’s very rare — almost once in a blue moon — that an individual would not look out for themselves at the end of the day.”

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