Inside the Private Writings of Caroline Ellison, Star Witness in the FTX Case

Three months before the cryptocurrency market imploded last year, Caroline Ellison, the 27-year-old chief executive of the crypto hedge fund Alameda Research, was racked with self-doubt.

“I have been feeling pretty unhappy and overwhelmed with my job,” Ms. Ellison wrote in a Google document in February 2022. She added: “At the end of the day I can’t wait to go home and turn off my phone and have a drink and get away from it all.”

Ms. Ellison had a lot on her mind. She did not think that she was well suited to running Alameda or was a particularly decisive leader, she wrote in another Google document. She was also going through a breakup with Sam Bankman-Fried, the billionaire entrepreneur who had founded Alameda and then FTX, one of the world’s largest cryptocurrency exchanges. They had dated on and off, and Ms. Ellison worried about “making things weird” and “causing drama.”

“It doesn’t really feel like there’s an end in sight,” she wrote in the February 2022 document.

Now Ms. Ellison is poised to be a star witness at Mr. Bankman-Fried’s criminal trial, which is scheduled for Oct. 2.

Mr. Bankman-Fried, 31, is accused of misusing billions of dollars taken from customer accounts and faces eight counts of fraud and election law violations. His spectacular downfall, which sent FTX and Alameda into bankruptcy, transformed Ms. Ellison from a powerful — yet relatively private — figure into a target of tabloid speculation. In December, she pleaded guilty to fraud charges and agreed to cooperate with the federal prosecutors investigating her former boyfriend.

His case is speeding toward a courtroom showdown in Manhattan. 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 brisk schedule for the run-up to the trial, asking prosecutors to come up with a witness list and produce other final materials. Prosecutors are expected to begin preparing at least some witnesses in August, two people with knowledge of the matter said.

As Mr. Bankman-Fried’s sometime-girlfriend and one of his earliest hires, Ms. Ellison had unique insight into the FTX founder. She also recorded many of her thoughts in writing, making observations about her personal and professional life in a handwritten diary and on Google documents that have circulated among lawyers 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 new insight into Ms. Ellison’s psychology during the final months of FTX. Ms. Ellison, now 28, was a prolific writer whose Tumblr posts about Harry Potter and Jane Austen have been widely dissected. But the Google documents are more personal and raw, with some directly addressed to Mr. Bankman-Fried, illustrating the complexity of their relationship and her ambivalence about Alameda.

In one Google document addressed to Mr. Bankman-Fried in April 2022, Ms. Ellison wrote that an earlier breakup with him had “significantly decreased my excitement about Alameda.” Life at the hedge fund, she added, “felt too associated with you in a way that was painful.”

A representative for Ms. Ellison’s legal team and a lawyer for Mr. Bankman-Fried declined to comment. A spokesman for the U.S. 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, got to know Mr. Bankman-Fried at Jane Street, the quantitative trading firm where he worked after college. They shared a commitment to effective altruism, the charitable movement that has gained adherents in the tech and finance industries.

After Mr. Bankman-Fried left Jane Street to start Alameda in 2017, he recruited Ms. Ellison as a trader. In 2021, he promoted her to co-chief executive, alongside another early hire, Sam Trabucco.

Mr. Bankman-Fried and Ms. Ellison also started an unsteady romantic relationship, with multiple breakups and reconciliations. At times, Ms. Ellison worried that Mr. Bankman-Fried thought she wasn’t good enough. When he was around, she wrote in the February 2022 Google document, she had “an instinct to shrink and become smaller and quieter and defer to others.”

After one split, Ms. Ellison cut off communication with Mr. Bankman-Fried. “I felt pretty hurt/rejected,” she wrote in the April 2022 Google document. “Not giving you the contact you wanted felt like the only way I could regain a sense of power.”

By last year, Mr. Bankman-Fried had become one of the world’s most prominent crypto entrepreneurs, his face plastered on billboards and magazine covers. His fame seemed to make life at FTX and Alameda harder for Ms. Ellison.

Staying put meant “having to be around you all the time, hearing people talk about how great you are all the time,” she wrote in the April 2022 document.

Ms. Ellison was compensated far less generously than other top executives at FTX and Alameda, though it’s unclear whether she was aware of it. According to court filings, 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 head of engineering, 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 spiraling and plunging several prominent companies into bankruptcy. During the crisis, regulators have asserted, Mr. Bankman-Fried, Mr. Wang, Mr. Singh and Ms. Ellison filled a hole in Alameda’s accounts using billions in customer funds deposited with FTX.

Even before then, Ms. Ellison doubted her own abilities. In the April 2022 document, she made a list of areas where she struggled, including “leadership” and “decisiveness.”

“Running Alameda doesn’t feel like something I’m that comparatively advantaged at or well suited to do,” she wrote.

By last fall, Mr. Bankman-Fried had lost faith in Alameda. He considered shutting the firm, according to court records, and invested more than $400 million in another trading company, Modulo Capital, which was led by a different former Jane Street trader whom he had also dated.

Ms. Ellison expressed jealousy and resentment toward Modulo in some of her writings, as well as a feeling that she was being squeezed out, two people who have seen the documents said.

Mr. Bankman-Fried’s business empire collapsed in November after a run on deposits exposed an $8 billion deficit.

“I just had an increasing dread of this day that was weighing on me,” Ms. Ellison wrote to him in a message that month, which was excerpted in court records. “Now that it’s actually happening it just feels great to get it over with.”

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 that 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, Calif.

People who know Ms. Ellison say they have been struck by her earnestness and her willingness to admit her own failings. In court in December, she said she was “truly sorry” for committing fraud. “I knew that it was wrong,” she said.

Ms. Ellison is expected to repeat that assertion at Mr. Bankman-Fried’s trial, which is expected to last four or five weeks. Much of the trial will revolve around messages that Mr. Bankman-Fried and the three cooperators exchanged on the messaging app Signal, two people briefed on the matter said.

As a woman in the male-dominated crypto industry, Ms. Ellison may appear more sympathetic to the jury than the other cooperators, lawyers familiar with the case said. In interviews last year, Mr. Bankman-Fried shifted some blame for the collapse to Alameda, saying he had little involvement in the hedge fund’s day-to-day management.

Moira Penza, a former federal prosecutor, said that the best government cooperators accepted blame on the witness stand and that the “power differential” between Ms. Ellison and Mr. Bankman-Fried could make her a compelling voice.

“This does not strike me as an effective strategy for the defendant to be blaming down,” Ms. Penza said. “Especially with someone who was once a romantic partner.”