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NEW YORK (Reuters) -Sam Bankman-Fried’s confidant Caroline Ellison faced questions from a lawyer for the FTX founder at his fraud trial on Thursday about her decision to cooperate with prosecutors against her former boss and romantic partner.
Ellison, the former co-chief executive of Bankman-Fried’s crypto hedge fund Alameda Research, has been on the stand since Tuesday detailing her role in a multibillion-dollar fraud prosecutors say was orchestrated by Bankman-Fried at his now-defunct cryptocurrency exchange.
Over two days on the stand, Ellison, who took the reins at Alameda in 2021, testified that the hedge fund took $10 billion in FTX customer funds to repay its debts and make investments.
Ellison said through tears on Wednesday that she lived in “dread” the truth would come out, and that FTX’s ultimate collapse last year brought an “overwhelming feeling of relief.”
On Thursday, she testified that she first met with prosecutors to explore reaching a cooperation agreement after the FBI in November 2022 searched her parents’ house, where she was staying after FTX and Alameda declared bankruptcy.
She said the agents took her notebook, as well a computer belonging to her mother and one belonging to her boyfriend, whom she did not name.
Defense lawyer Mark Cohen asked her whether she needed to plead guilty to all seven charges prosecutors suggested – which include wire fraud and conspiracy to commit securities fraud – to get a deal.
“My understanding was that these were the charges that the prosecutors suggested but that I should only plead guilty to them if I believed that I was guilty of them,” she said, adding that she understood that while her cooperation could result in a more lenient sentence, that was ultimately up to the judge.
Prosecutors say Bankman-Fried, 31, plundered billions in customer funds to prop up Alameda, buy real estate and donate more than $100 million to U.S. political campaigns. FTX collapsed and declared bankruptcy in November 2022, shocking financial markets and destroying Bankman-Fried’s reputation.
Bankman-Fried has pleaded not guilty to two counts of fraud and five counts of conspiracy, and has said that while he made mistakes running FTX, he never intended to steal funds.
Ellison, a 28-year-old Stanford University graduate, is one of three former members of Bankman-Fried’s inner circle who have pleaded guilty to fraud charges and agreed to cooperate with the Manhattan U.S. Attorney’s office.
On Thursday, Cohen asked Ellison how often she was speaking with Bankman-Fried in May 2022, when a downturn in cryptocurrency prices led some of Alameda’s lenders to recall debts. She had testified on Tuesday that they “broke up for good in the spring of 2022.”
“I found it difficult to have one-on-one conversations with him,” Ellison said, but said she still had discussed work with him.
Cohen had said in his opening statement last week that Bankman-Fried had relied on Ellison to run Alameda, suggesting her failures contributed to the collapse of the two firms.
Earlier in the trial, Gary Wang, FTX’s former technology chief, testified that Bankman-Fried falsely tweeted that FTX was “fine” in November as the exchange faced surging demand for withdrawals. A third cooperating witness, former FTX engineering chief Nishad Singh, is also expected to testify at the trial, which could last up to six weeks.
