How Caroline Ellison schooled SBF’s attorney

Key witness Caroline Ellison wrapped up her three-day testimony against her former boyfriend and boss Sam Bankman-Fried at his federal fraud trial Thursday. Ellison, on cross-examination, proved perhaps even better than on the direct examination by prosecutors. She gave lots of crisp “Yes, that’s right” responses to defense lawyer Mark Cohen, corrected him on a couple of points about which she’d already testified, and fixed his pronunciation (on the name “Modulo,” a trading firm that competed with Alameda Research, where Ellison had been CEO and which Bankman-Fried owned).

Documents entered into evidence in the case had portrayed a less confident Ellison—she tended to add question marks to her sentences, for instance, while transcripts showed her using lots of filler words like “um” and “yeah”; however, on the stand, despite looking ill at ease and fidgeting during breaks in the proceedings, when she testified, she came off as clear and told a consistent story.

While Ellison did well, Cohen misfired.

Cohen’s strategy was confusing; he elicited little from Ellison beyond what she’d said in direct testimony, and indeed opened the door to a piece of evidence that the prosecution had been trying to get admitted for quite some time. Cohen questioned Ellison about an Alameda “all-hands” meeting she’d held for Alameda employees in November 2022. At that point, she’d known for months that Alameda had been taking FTX customer funds for its own expenses—which had happened at Bankman-Fried’s direction, per her earlier testimony—and with customer withdrawals on FTX occurring at a fast clip, she knew Alameda couldn’t pay back FTX customers what it owed them.

Prosecutors had been pushing to get clips of the meeting recorded by an employee into evidence because in November, when Ellison had discussed Alameda taking the funds—and Bankman-Fried engineering the scheme—she hadn’t yet known about a government investigation into FTX and Alameda. Cohen asked a couple of questions about the all-hands meeting, but it was prosecutor Danielle Sassoon, on redirect, who got ahead of the recordings that the prosecution would play later in the afternoon. Sassoon, over Cohen’s objection, managed to get in a question about Ellison’s statement on the recording that it was “Sam, I guess” who had made the decision to use FTX customer funds for Alameda. “Why did you say ‘I guess?’” Sassoon asked. Ellison explained: “The words ‘I guess’ were a vocal tic” and “I hadn’t wanted to go into the meeting wanting to cast blame on anyone.” Later in the afternoon, when the jury heard Ellison’s voice saying “Sam, I guess” and sounding a little giggly and nervous, they now had context for it—making it difficult for the defense to raise questions about whether Ellison sounded uncertain.

Cohen also could’ve pushed Ellison about how she had a financial interest in saving FTX and Alameda. He asked about how the total value in her FTX account, where her bonuses and FTX equity she’d been granted were held, was $1 billion at one point—but then let the point drop.

He also pulled at a thread about the timing of her going to the government and offering to testify against Bankman-Fried, pointing out that it was after FBI agents searched her parents’ house, where she was staying, taking her mother’s laptop and the laptop of her boyfriend, who was in the house at the time. (“Without naming names,” Cohen said, asking if the boyfriend had also worked for FTX or Alameda. “Yes, he had,” Ellison responded.) Cohen didn’t pursue the point further. He also started, but didn’t take further, a line of questioning about whether Ellison considered resigning; she said she had thought about it, but did not resign.

Sassoon, on redirect, asked about that, too. “I told Sam that I wanted to quit and he told me that I couldn’t” because she was too important to Alameda, she said. “I trusted his opinion and I didn’t want FTX and Alameda to collapse.” She walked out of the courtroom without glancing at Bankman-Fried; she has not talked to him since November, she testified.