
The trial for the collapse of the cryptocurrency exchange FTX and its founder, Sam Bankman-Fried, is ongoing in New York City.
Witnesses, including Marc-Antoine Julliard, an investor who lost $100,000, took the stand as did Adam Yedidia, a close college friend and SBF's roommate in the $300 million Bahamas compound.
But the star witness is expected to be former girlfriend Caroline Ellison, the CEO of Alamada Research, and what role she might have played in the collapse.
FOX Business takes a look at the woman who may play a critical role for the prosecution.
In 2017 when Bankman-Fried left Jane Street to start his own hedge fund, known as Alameda Research, Ellison joined him in what she called a blind leap into the unknown. She became one of the leading traders at the new firm and said on an FTX-related podcast that joining Alameda was too cool of an opportunity to pass up, but dealing with capital was 'kind of daunting' when she first started at the firm in 2018.
Alameda, a major trader in the cryptocurrency industry, was frequently traded on FTX's platform, the Wall Street Journal reported. Although Bankman-Fried was the founder and majority owner of Alameda, he eventually ceded control of its operations and focused mainly on his role as CEO of crypto exchange FTX, which he founded in 2019. FTX achieved a valuation of roughly $32 billion and was the third-largest cryptocurrency exchange globally by volume.
In the fall of 2021, the value of cryptocurrencies rose significantly, but in early 2022 the value of the digital currencies fell and many investment and lending firms were experiencing financial difficulties.
By early November of this year, there were widespread reports about the financial health of both Alameda and FTX. Binance scuttled a tentative plan to buy FTX after due diligence revealed what Binance CEO Changpeng Zhao called a 'chaotic' balance sheet in an interview with Fox Business's Susan Li.
The interconnectedness between the two firms eventually led to their collapse, as FTX lent billions of dollars to Alameda in an effort to shore up the firm's finances. As unnerved investors poured out funds from FTX, it was unable to meet those demands and spiraled into insolvency.
In a video meeting before the firm and FTX filed for bankruptcy, the Wall Street Journal reported that Ellison informed Alameda staff about FTX using customers' funds to help Alameda meet its liabilities, and said that she, Bankman-Fried, and other members of the firms' leadership were aware of the decision.
This story has been updated with the FTX trial underway.