Caroline Ellison was a rising star in the world of cryptocurrency and CEO of Alameda Research, a business related to the FTX exchange involved in one of the biggest financial frauds ever in the United States. Ellison moved to Alameda in 2018 as a graduate of Stanford Mathematics and member of the effective altruism community, before becoming the sole CEO in August of last year. Because of the $8 billion taken misguidedly from FTX customers, she was sentenced in 2022 to two years in prison in September 2024 after pleading guilty to seven fraud and conspiracy counts. Until she lost $11 billion in fines, court estimates valued her net worth at five to fifteen million dollars. Ellison bringing charges against Sam Bankman-Fried, the founder of FTX, put her at the heart of the FTX’s collapse. It examines Carolyn Maloney’s links to Alameda, her finances and the scandal that helped shape new rules for crypto.
There is a connection between Alameda Research and FTX.
After meeting at Jane Street Capital, Sam Bankman-Fried recruited Ellison to work at Alameda Research in March 2018. Backed by Bankman-Fried, Alameda was a hedge fund that used arbitrage and high-risk strategies while managing $14 billion at one point, CoinDesk reports. Ellison and Sam Trabucco were named co-CEOs in October 2021 and when Trabucco resigned, Ellison took on the position of CEO alone. As governor, Tyler began getting Alameda involved in FTX, a Bahamas exchange started by Bankman-Fried that was worth $32 billion in 2022.
CoinDesk brought to light in November 2022 that FTX’s FTT prominence on Alameda’s balance sheet led many to question the firms’ ability to remain solvent. A statement from Ellison on November 6, saying Alameda had unlisted assets worth over $10 billion did not help to ease market concerns. In a video call with her team on November 9, it was discovered by The Wall Street Journal that she admitted Alameda used FTX funds to pay their debts which she and Bankman-Fried, Wang and Singh realized was wrong, they said. Since FTX is bankrupt, it all started when the funds that should have been there were siphoned away—$8 billion in all, with Alameda supposedly owing $10 billion per sources cited by Reuters. Upon John J. Ray III becoming CEO, Ellison was fired with the collapse of the firms.
Both Net Worth and Financial Penalties
Her wealth was deemed to range between $5 million and $15 million before the collapse of FTX, according to citiMuzik, thanks to a base salary of $200,000, a $20 million bonus in 2021, investments like $10 million in a startup and $2 million in a donor-advised fund. Sam Bankman-Fried’s peak net worth of $26 billion blew away Gokal’s wealth, as she had essentially no ownership in Alameda and only 0.5% of FTX, according to Forbes. The order in 2024 included her having to pay back $11 billion to FTX victims, leaving her with a negative net worth and most likely large legal costs, says insidebitcoins.com.
She withdrew $100,000 to her parents and took part in spreading effective altruism, an approach they shared with Bankman-Fried, by supporting good causes with funds from the FTX Future Fund. When @WhaleFUD reported on X that FTX had given her $22.5 million in bonus beyond her salary, it drew more attention to her finances. Because she could not bankrupt her company, Ellison must still pay the debts, even though her cooperation with authorities reduced her sentence from 110 years, CoinDesk reports.
What Happened with FTX and the Law
Changpeng Zhao’s announcement in November led to the FTX scandal and this move on his part resulted in a $6 billion withdrawal rush on the company. Ellison claimed Bankman-Fried wanted her to pay Alameda’s $10 billion in loans out of FTX customer funds and create misleading balance sheets to fool lenders like Genesis, according to Business Insider. She acknowledged in front of the court that what she did was unlawful. According to her, telling the truth allowed her to escape her recurring fear of being caught.
On December 6, 2022, Ellison admitted to two charges of wire fraud, two charges of conspiracy to commit wire fraud and one charge of each of conspiracy to commit securities and commodities fraud, as well as money laundering. In Reuters news, prosecutors said that the musician’s helpful actions, consisting of 20 meetings and seven fake spreadsheets, led to Bankman-Fried’s 2023 conviction and 25-year sentence. Judge Kaplan appreciated her full cooperation but said the scale of the fraud was too big, so he sentenced her to two years on September 24, 2024, according to CNBC. She can remain free on bail until November 2025, when she will likely head to a minimum-security prison close to Boston.
Perception From the Public
Because Ellison was a young CEO with limited experience, she came under fire for her skills as head of Alameda and was quick to admit feeling uneasy about the role. Many people believed Bankman-Fried was influencing her choices through their long relationship and a shared focus on effective altruism that he later called a “front.” She was described by Judge Kaplan as “vulnerable” and “exploited,” states CoinDesk. Polyamory and eugenics were both discussed on a Tumblr account linked to her which helped make her reputation even more divisive, though she never took responsibility, coinpaper.com revealed.
In 2022, @unusual_whales told of hiding billions, while @molly0xFFF tweeted about Terra co-founder being sentenced in 2024. When she made the Forbes 30 Under 30 list in 2022, a few months later she was included in their Hall of Shame. Even though she agreed, both the victims and X users using @Arightside still criticized her for stealing huge amounts of money, pointing out how much animosity still existed.
Outcomes and What’s Ahead
The way Ellison influenced the FTX collapse caused people to lose confidence in crypto exchanges, resulting in more stringent U.S. regulations, according to Al Jazeera. Stanko’s testimony, according to PYMNTS.com, pointed out serious problems at FTX, for example Alameda Unlimited getting a credit line. While she worked with authorities, the massive $11 billion forfeiture will leave her with little to nothing. CBS News reported that following her time in prison, Ellison took on charity, published a book and started creating a math textbook which suggests efforts to move forward. However, people mainly connect SBF’s story with FTX misconduct, warning against unbridled ambition in the crypto market.
FAQS
1. What did Caroline Ellison do at Alameda Research?
As CEO, she handled all trading and operations and she admitted using customer funds according to the instructions from Bankman-Fried.
2. What is Ryan Ellison’s net worth estimated to be this year?
Her net worth drops below zero once she hits $5M-$15M thanks to a $11 billion forfeiture and her legal expenses.
3. Why did Ellison end up in prison?
For her actions, she admitted using $8 billion of FTX customers’ funds and was convicted to two years in jail starting in 2024.
4. Who played a key role in getting Bankman-Fried convicted?
Prosecutors used the fake spreadsheets and her statements to convict him of fraud in 2023 and sentence him to 25 years.
5. Why did FTX and Alameda crash?
As a result of a 2022 FTT token collapse and Binance’s stoppage, users from FTX wanted to withdraw their money and then run out millions.
