Prosecutors Thursday accused FTX founder Sam Bankman-Fried of bullying his former girlfriend Caroline Ellison during her testimony in the fraud case against him and his failed cryptocurrency exchange.
The prosecution told U.S. District Judge Lewis Kaplan in a sidebar Thursday that Bankman-Fried, 31, who is on trial in Manhattan district court for fraud, laughed, shook his head, and scoffed during Ellison's testimony.
A prosecutor in a sidebar told the judge that Bankman-Fried's behavior was having a visible impact on Ellison, who cried on the stand during her testimony. Kaplan denied noticing any such reaction from Ellison but told Bankman-Fried's attorney to remind his client of appropriate behavior during the trial.
Ellison, 28, the prosecution's top witness in the case, has testified this week that she worked with Bankman-Fried to steal billions of dollars from FTX's customers to cover losses and pay back loans owed by Alameda Research. Alameda, of which Ellison was chief executive officer, was the sister hedge fund of FTX.
An Alameda balance sheet was leaked to the media in November of 2022, causing a mass exodus of customers from FTX, forcing the company into bankruptcy and calling into question what happened to customers' funds. Ellison has testified that the scheme to siphon customers' funds came crashing down when FTX couldn't keep up with the withdrawals.
During her testimony, Ellison asserted that taking customers' money to cover risky investments made by Alameda was Bankman-Fried's idea. She testified that Bankman-Fried's "utilitarian" stance convinced her to do things like lie to lenders or send out falsified balance sheets. She alleges that Bankman-Fried hoped to "create the greatest good for the greatest number of people," while dismissing rules like "don't lie" or "don't steal," a stance that convinced her to participate in the alleged fraud.
Ellison pleaded guilty back in December of 2022 to charges of conspiracy to commit wire fraud against customers of both FTX and Alameda, as well as charges of conspiracy to commit securities fraud and conspiracy to commit money laundering.
Ellison told U.S. District Court Judge Ronnie Abrams during her trial that Bankman-Fried and other FTX executives had received billions in loans from Alameda, covered by customer funds.
Ellison is one of three people in Bankman-Fried's inner circle who are testifying against the failed crypto exchange founder. FTX co-founder Gary Wang and engineering director Nishaud Singh are also expected to take the stand.
The trial continues today as Bankman-Fried's defense team cross-examines Ellison.
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