Sam Fried's Ex-Girlfriend Caroline Ellison to Testify Against Him in Fraud Trial

Ellison and Wang both pleaded guilty to fraud charges last year

Caroline Ellison, the ex-CEO of Alameda Research and former lover of Sam Bankman-Fried, is expected to be the next witness for the prosecution in the trial of the crypto tycoon, who is accused of fraud and money laundering. She will follow Gary Wang, the ex-CTO of FTX, who testified on Friday that Bankman-Fried gave Alameda special access to FTX's funds.

Ellison and Wang both pleaded guilty to fraud charges last year and agreed to cooperate with the government in exchange for leniency. They are among at least three former associates of Bankman-Fried who have turned against him in court.

Bankman-Fried, the founder of both Alameda and FTX, allegedly used his influence over the crypto exchange to manipulate the price of FTT, the native token of FTX. He also allegedly lied to FTX customers about the amount of money in the exchange’s insurance fund, which was supposed to protect them from losses.

Wang, who wore a black suit that did not fit him well, said that Bankman-Fried instructed him to write a secret code that allowed Alameda’s account balance on FTX to go negative. This meant that Alameda could spend more money than it had on FTT, without paying any interest or fees. No other customer had this privilege, Wang said.

Wang also said that the insurance fund displayed on FTX's website was not real. It was calculated by a formula that had nothing to do with the actual amount of money in the fund. The fund was actually lower than what was shown, because Alameda’s negative balance was not counted. Wang said that Alameda's account had a negative balance of $8 billion at one point.

The trial will resume on Tuesday at 9:30 a.m. ET, after a break for Columbus Day (Indigenous People's Day). Ellison is likely to take the stand after Wang finishes his testimony. She was the CEO of Alameda until 2020, when she left the company amid a scandal involving her relationship with Bankman-Fried. She is also a former girlfriend of Bankman-Fried, who has been described as a "crypto Casanova" by some media outlets.