Forbes: Unveiling the Untold Story of Alameda CEO Caroline Ellison

Authors: David Jeans & Sarah Emerson & Richard Nieva & Michael del Castillo

Compiled by: Katie, Odaily Planet Daily

Original Title: ‘Queen Caroline’: The ‘Fake Charity Nerd Girl’ Behind The FTX Collapse

Aside from SBF, one of the key figures behind FTX, the co-CEO of Alameda, Caroline Ellison, has maintained an air of mystery. (Just today, an FTX spokesperson stated that FTX has fired Gary Wang, Caroline Ellison, and Nishad Singh.) Caroline Ellison is a risk-loving math genius and Harry Potter fan. She is also a significant player in the FTX collapse, a darling of the alt-right.

In 2021, when Caroline Ellison was asked what advice she would give to her younger self, her response was sincere and brief: "I would tell my younger self not to hate risk so much and to believe in myself more." This was her comment in a previously unpublished application for Forbes' 30 Under 30 list.

A year later, this statement was interpreted as an "epitaph" for one of the biggest financial disasters in recent history, in which Caroline herself played a leading role. Alameda, under Caroline's leadership, was one of the core parts of FTX's business empire.

It is alleged that Alameda used FTX customer deposits for speculative investments, extracting billions of dollars without users' knowledge. It was also Alameda that covered up this scheme, as the hedge fund ensured its assets in FTX transactions bypassed its own balance sheet. In a bankruptcy filing, FTX estimated that over 1 million creditors would seek compensation. Reports indicate that they were persuaded to invest their life savings into the platform. Documents also show that Alameda Research issued three personal loans to FTX executives, including a $1 billion loan to SBF. Although SBF owned 90% of the trading company, when both FTX and Alameda collapsed, it was Caroline Ellison at the helm.

There is little public information about Caroline, but through conversations with eight people who know her and unpublished content from her October interview with Forbes, we pieced together an image of a quiet math nerd who rose through the crypto space until FTX's bankruptcy. Over the years, Caroline wholeheartedly participated in SBF's "paper-drunk" financial carnival, drawing her into an ever-expanding vortex of nonsense, deception, and despair. She did not respond to requests for comment on this article.

"There are a lot of very smart people, but they may not be good at the chaotic trading world—especially in cryptocurrency." ------ Caroline Ellison, May 2022

Caroline Ellison was once a "star student." Ruth Ackerman, a math professor who taught Caroline at Stanford University ten years ago, described her as "smart, focused, and very mathematically gifted." She found it hard to believe that Caroline was involved in one of the biggest fraud cases of the past decade.

Ackerman told Forbes in an interview, "I found out because people started contacting me on LinkedIn, asking me to retract my endorsement of her computer science skills."

Now, as the tragedy of FTX's bankruptcy draws increasing attention, with multiple U.S. agencies including the SEC and the Department of Justice announcing investigations, Caroline seems to be heading towards a low point, her adventurous nature leading to catastrophic consequences.

In a podcast in May, she stated, "It's very important to be able to face risks calmly. There are a lot of very smart people, but they may not be good at the chaotic trading world, especially in cryptocurrency."

"Their goal is to maximize wealth. They have never lived in a world without risk." ------ An early employee of Alameda

In March 2018, while working at the quantitative trading firm Jane Street, Caroline Ellison was approached by a former colleague with a life-changing proposal.

While having coffee in California, SBF recommended she join his new cryptocurrency hedge fund, Alameda Research, which would exploit arbitrage opportunities in Bitcoin across different countries. SBF claimed it was a perfect arbitrage opportunity. This deal would help him achieve his goal of donating billions to charity.

Caroline told Forbes in an unpublished interview in October 2021, "I thought it sounded really exciting at the time, but I really liked Jane Street, so leaving was a tough decision."

But Caroline left her comfort zone and officially stepped into the cryptocurrency space.

Both Alameda and FTX were helmed by SBF, who created FTX after spending two years at Alameda, establishing what he envisioned as a modern cryptocurrency exchange. When SBF decided to leave Alameda and focus all his energy on the rapidly growing FTX, Caroline took over as co-CEO of Alameda.

The dramatic implosion of FTX, from "the asset situation is good" to bankruptcy in four days, shifted attention to Alameda's $10 billion in assets and the alleged use of FTX customer deposits for risky investments. Several companies that were once considered pillars of the industry now face a similar fate. Despite daily headlines accusing him of years of misconduct, the focus has shifted from SBF to his inner circle, and Caroline has begun to enter the public eye, a rare female leader in a male-dominated industry.

In recent days, Caroline has faced fierce criticism from cryptocurrency supporters, who blame her for Alameda's downfall. But amid the sharp criticism, a group has emerged to defend her. One of Caroline's supporters told Forbes that many defending her have gathered on the peer-to-peer platform Urbit, created by computer scientist Curtis Yarvin. They believe Caroline is a scapegoat and claim that former co-CEO Sam Trabucco is the mastermind behind Alameda's internal collapse. Trabucco did not respond to requests for comment.

"It feels like we really don't know what we're doing." ------ When Caroline Ellison joined Alameda

Caroline's father, Glenn Ellison, is currently the head of the economics department at MIT, and her mother, Sara Fischer Ellison, is a lecturer in the same department. She grew up in a digitally-savvy household in the suburbs of Boston. While other kids played with Lego blocks, Caroline began studying Bayesian statistics before middle school. One year, instead of writing her father a birthday card, she gave him a research report on the economics of stuffed toy pricing. Caroline previously told Forbes, "I did get exposed to a lot of economics earlier than most people."

Caroline is a natural mathematician and has participated in several competitions for women in mathematics. But her interests extend far beyond math; in her senior year, she also received an honorable mention in the Linguistics Olympiad. She loves to read, stating that her parents read her the first Harry Potter book when she was three, and she read the second one herself at five. She identifies as a student of Ravenclaw, the house representing wisdom and intelligence.

When Caroline arrived at Stanford University in 2012 as a math major, her career aspirations had already taken shape. While adapting to college life, she posted daily thoughts on Tumblr.

Last year, when Forbes asked her about things she didn't learn in school that helped her in the real world, she replied, "Almost everything. Like taxes."

She did learn one thing—a philosophy known as effective altruism. This movement, popular in Silicon Valley, calls for people to maximize their efforts using data to make a positive impact on the world. It was pioneered by a group of philosophers, including Will MacAskill. SBF said it was he who persuaded himself to do good with the money he earned, later joining the charitable arm of FTX's Future Fund, from which he resigned last week. At Stanford, Caroline joined the campus's effective altruism club and became its vice president.

Now, people are beginning to question whether Caroline, SBF, and their members truly believed in the principles of effective altruism or if it was merely a way to cover up their alleged misconduct. In a private chat released by Vox on Wednesday, a reporter asked SBF if his comments about morality were "mostly a facade," to which SBF admitted. Caroline once seemed to rename her blog to "Fake Charity Nerd Girl," perhaps out of a sense of ironic self-awareness.

"For us, it's good to have two people who can take ultimate responsibility for things." ------ Caroline Ellison and Sam Trabucco served as co-CEOs of Alameda

After graduating from Stanford, Caroline became a trader at Jane Street, where she met SBF. They connected over their shared interest in effective altruism.

After SBF persuaded her to switch to Alameda in 2018, Caroline realized she had joined a chaotic startup. Caroline told Forbes in an interview, "We really didn't know what we were doing." There, she also met SBF's close friends Nishad Singh, Gary Wang, and soon-to-be-joined Sam Trabucco. They all shared a common interest in effective altruism.

At the end of 2018, SBF moved the company's headquarters from Berkeley, California, to Hong Kong. According to an early employee, SBF believed that the city had a favorable regulatory environment and was home to companies like Binance and Crypto.com, making it the perfect choice for Alameda. In the following months, the team bounced between six WeWork shared offices across the city, including one specifically for storing sofas.

But SBF's next plan was already in motion; with initial funding from Binance, he launched FTX in 2019. As Caroline immersed herself in Alameda and quickly became a standout in the crypto space, she began to shine at the trading company, becoming co-CEO of Alameda alongside Trabucco in the summer of 2021. With daily trading volumes around $5 billion, this role thrust Caroline to the forefront of the industry.

Not long after, Caroline and Trabucco made it onto Forbes' 30 Under 30 list. In an interview at the time, she said, "It's good that we have two people who can take ultimate responsibility for things."

"I think I was somewhat lucky." ------ Caroline Ellison, May 2022

In the past two weeks, there has been much speculation about the relationship between Caroline and SBF, but SBF confirmed in an interview with The New York Times that the two are no longer in a relationship. A report from CoinDesk stated that Caroline had dated SBF multiple times, and they had been roommates, with their relationship being somewhat close, though the specifics remain unclear.

Years ago, Caroline wrote on Tumblr in a somewhat uncertain serious tone: "After exploring open relationships, she believes everyone should have a ranking of their partners, and people should know their place in the ranking, with higher positions leading to vicious power struggles."

Just like the ambiguous relationships among executives, the relationship between Alameda and FTX was also ambiguous, quickly overshadowing that of its sister company, FTX. SBF charmed investors like Sequoia Capital, NEA, and Lightspeed Venture Partners, and FTX's customer deposits soared, exceeding 1 million users. But even investors were sometimes unaware of Alameda's role.

According to staff from FTX and companies that did business with the exchange and Alameda, as Alameda gradually faded from view, Caroline became almost invisible. A co-CEO of a project that received funding from Alameda told Forbes, "Despite having an investment relationship with the trading company, they never interacted with her. Moreover, in most cases, Caroline seemed happy to stay in the background."

According to a former employee of Alameda, when Trabucco resigned as co-CEO in April this year, Caroline found herself with control over Alameda alone, while Trabucco left a few months later, publicly announcing his departure on Twitter in August. Trabucco stated that the co-CEO role "was exhausting," and he had "not been working at all" recently. The former Susquehanna trader graduated from MIT a year after SBF and indicated that he had "significantly reduced" his role in recent months and was about to leave.

Months later, everything began to fall apart. Last week, Binance CEO Changpeng Zhao announced that Binance would acquire FTX to rescue it from a liquidity crisis. But after due diligence, Binance quickly backed out of the deal, citing "mismanagement of customer funds and alleged investigations by U.S. agencies." In just a few days, SBF's empire faced collapse, with several of his entities filing for bankruptcy, including Alameda.

Currently, the SEC, the Department of Justice, and local authorities in the Bahamas are investigating the situation. Questions have arisen about how Alameda lost all customer funds, with FTX allegedly transferring them to support the struggling company. Reports indicate that SBF's luxurious penthouse in the Bahamas is set to be sold for $40 million. Caroline, once a key figure behind SBF, now bears the brunt of the blame.

Rumors are circulating online that Caroline plans to flee from Hong Kong to Dubai, which has no extradition treaty with the U.S., but her current whereabouts are unknown. Her last public statements were two tweets on November 6, defending against external criticisms of the company's balance sheet.

Six months ago, during an interview with the crypto podcast El Momento, Caroline was asked if she would "make any changes" if she could go back in time. At that time, the so-called cryptocurrency winter had already begun to have a chilling effect on many companies and markets, but FTX remained solvent.

She smiled and said, "I would definitely keep things the same. I feel like I've been quite lucky to some extent. I don't think that if I went back and chose a different path, I would have such a good outcome."