In November 2022, Caroline Ellison, who previously kept a low profile even as the CEO of a multi-billion quant trading firm, found herself at the center of FTX's ugly meltdown. While the media and Twitter pundits scrutinized every aspect of her biography, social media presence, and relationship with Sam Bankman-Fried, her Twitter went radio silent, with only crumbs of information occasionally making it to the public eye.
In this article, we will take a closer look at Caroline Ellison's net worth, her role in the FTX scandal, her educational and family background, and her cooperation in the case against SBF.
Who is Caroline Ellison?
Caroline Ellison was born in November 1994 to a family of economics professors working at the Massachusetts Institute of Technology (MIT), one of the world's most renowned research institutions. Her father, Glenn Ellison, is head of the MIT economics department, described as "a leader in the fields of economic theory, industrial organization, and financial economics." Glenn Ellison is also known for being Gary Gensler's boss when the now Chairman of the SEC used to teach at MIT.
Caroline's mother, Sara Fisher Ellison, is a senior lecturer in economics at MIT, with industrial organization in the pharmaceutical industry and e-commerce as the main focus of her research. She is also an author of an award-winning MOOC (massive open online course) in the MicroMasters on data analysis for social scientists that has attracted over 100,000 learners.
Caroline Ellison attended the prestigious Newton North High School, where she participated in numerous math competitions and even served as the team's captain. After completing her high school education, Ellison enrolled at Stanford University and graduated in 2016 with a bachelor's degree in mathematics. During her time at Stanford, she consistently scored Top 500 at Putnam Competitions and developed an interest in effective altruism, the data-driven philanthropic social movement of which Sam Bankman-Fried was an adherent as well.
Involvement in FTX and Alameda Research fraud
While attending Stanford University, Caroline Ellison interned as a quantitative trader at a trading firm Jane Street, where she first met Sam "SBF" Bankman-Fried. As they bonded over their shared interest in effective altruism, Ellison accepted his offer to take a job as a trader at Alameda Research, becoming a member of SBF’s Hong Kong-based trading desk in 2018. Here she swiftly advanced in her career, becoming a co-CEO along with Sam Trabucco in 2021 and the sole CEO in August 2022 after Trabucco stepped down.
Prior to its collapse, Bankman-Fried's crypto exchange FTX was valued at $32 billion with over 1 million users and was widely considered to be one of the most legit and reliable firms in the crypto industry. All it took to deliver a fatal blow to SBF's crypto empire was one leaked financial published by CoinDesk in November 2022.
According to the bombshell report, much of the $14 billion on Alameda's balance sheet was in FTT, a utility token issued by FTX pretty much out of thin air. While there was nothing strictly illegal with it, it showcased that most net equity of Alameda Research was tied in a completely illiquid altcoin that its sister company created, not independent assets.
Following the report, Changpeng "CZ" Zhao, the CEO of a rival cryptocurrency exchange Binance, announced that his company plans to liquidate all its FTT holdings valued at about $530 million. By the next day, FTX faced a liquidity crunch as customers rushed to withdraw $6 billion from the platform. As the value of FTT plummeted more than 80% in two days, Bankman-Fried started looking for emergency credit lines from VC firms before turning for help to Binance. Even though Binance initially entered a non-binding agreement to rescue a sinking rival, it walked away from the deal the next day after reviewing FTX's financials. Shortly after, the US regulators initiated an investigation into Bankman-Fried's exchange.
As Wall Street Journal reported, FTX lent about $10 billion in customer assets to its sister company and trading firm Alameda Research. Alameda had a virtually unlimited line of credit from the exchange, posting FTT as collateral to back these loans. Even if FTX issued more FTT, its value won't change as new coins never made it to the open market. When customers rushed to pull their money out, FTX simply didn't have enough funds to honor all withdrawals.
According to the SEC's complaint, there “was no meaningful distinction between FTX customer funds and Alameda’s own funds,” and Bankman-Fried used Alameda as his “personal piggy bank.” As the CEO of Alameda Research, Caroline Ellison was fully aware of the misuse of customers' money and told a judge she "knew it was wrong," the transcript of her plea hearing reads.
"I understood that if Alameda's FTX accounts had significant negative balances in any particular currency, it meant that Alameda was borrowing funds that FTX's customers had deposited on the exchange," she added.
Caroline Ellison's plea agreement
In December 2022, Caroline Ellison pleaded guilty to two counts of wire fraud, two counts of conspiracy to commit wire fraud, conspiracy to commit securities fraud, conspiracy to commit commodities fraud, and conspiracy to commit money laundering. Ellison claimed she committed these crimes at Bankman-Fried's direction.
Under the plea agreement, Ellison must surrender her travel documents, forfeit any proceeds of crime and pay restitution of an amount determined by the court. Should she fully cooperate with law enforcement, the agreement would waive any charges except criminal tax violations, allowing Caroline to escape a potential 110-year prison term she faced before the plea.
Interestingly, Ellison isn't the only SBF's lieutenant to turn on her former boss — FTX co-founder Gary Wang and former director of engineering Nishad Singh both pleaded guilty to charges against them and are cooperating with prosecutors.
To score the deal, Caroline Ellison lawyered up with former SEC official Stephanie Avakian, former SEC enforcement director who also oversaw action against Ripple, Robinhood, Tesla, GE, and Elon Musk. She also retained her lawyers from WilmerHale, an influential law firm.
Meanwhile, Sam Bankman-Fried pleaded not guilty to all charges and will go to a trial in October. Given the strength of the criminal case against him, the disgraced CEO could be facing life in federal prison.
What is Caroline Ellison Net Worth?
According to The Sun, Caroline Ellison's net worth right before the collapse of the exchange was around $15 million. Court documents also reveal that founders and key employees of FTX received billions in payments and loans, including $2.2 billion to Bankman-Fried and $246 million to Gary Wang. Ellison got paid just $6 million, the least out of all exchange execs.
However, with much of her wealth tied to now-bankrupt FTX, disgorgement of ill-gotten gains, and legal fees, it's difficult to estimate Ellison's current net worth, though it may be safe to assume that it took a significant blow since the collapse of the exchange.
Who is Caroline Ellison dating?
According to the follow-up investigation by CoinDesk, Caroline Ellison was at times romantically involved with Bankman-Fried. She lived with the FTX boss in a luxury penthouse in the Bahamas — along with nine other senior execs who all used to be paired romantically with each other, leading to widespread speculation that FTX was run by a polyamorous commune, aka polycule.
Interestingly, a scandalous Tumblr blog that was speculated to belong to Ellison, seems to give some credence to the "FTX polycule" theory.
"When I first started my foray into poly, I thought of it as a radical break from my trad past, but tbh I've come to decide the only acceptable style of poly is best characterized as something like 'imperial Chinese harem,'" one post reads. "None of this non-hierarchical bullshit; 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."
Caroline Ellison Tumblr blog
Caroline's bizarre Tumblr blog, which she appears to have maintained for years, displayed her unhinged fascination with sex, power, and race science. Although Ellison never confirmed the account's authorship, the blog — active since 2014 — linked directly to her Twitter account, and all personal details match up perfectly with her biography.
The blog, which went by the name of “Fake Charity Nerd Girl” (sic!) and the handle “worldoptimization,” has been since deleted but is still accessible through the Wayback Machine. Besides Ellison's posts about polyamory and cringe list of traits she finds attractive in men (which include, among other things, "controlling most major world governments" and "sufficient strength to physically overpower you"), former Alameda CEO also appears to be an adept of "human biodiversity," a sugar-coated euphemism for eugenics popularized by the white supremacist groups.
“I feel like part of me that is interested in HBD is the same part of me that loves personality types and ‘which character are you’ quizzes,” one post reads. “There’s a stereotype of racist people that they will assume any East Asian person speaks Chinese or something. I appreciate that HBD people are the exact opposite of that, and will make fun of you for saying something about ‘Indians’ without specifying province and caste because come on, the genetic differences there are massive.”
But perhaps the most striking of them all is Ellison's confession that crypto to her is really just about grift and ponzis, and not about the noble goals of banking the unbanked and resisting authoritarian governments, as was stated in FTX's numerous ad campaigns.
“I didn’t get into this as a crypto true believer,” the account wrote in March. “It’s mostly scams and memes when you get down to it.”