Caroline Ellison, former co-CEO of Alameda Research, has garnered attention for aiding disgraced FTX operator Sam Bankman-Fried, whose cryptocurrency exchange defrauded people out of billions of dollars. (Source: Twitter)

Caroline Ellison’s Cautionary Tale Shows How Parity in Corruption Occurs

Like Elizabeth Holmes, the CEO of Theranos, a medical company that defrauded investors, Caroline Ellison was a brilliant player in Sam Bankman-Fried’s corrupt crypto empire—until it collapsed.

A story in the latest issue of Fortune magazine details how Ellison was the co-CEO of a cryptocurrency firm called Alameda Research back in 2021 when she became involved in boosting Bankman-Fried’s FTX crypto exchange to the tune of billions of dollars. The firm was valued at $32 billion at its peak.

When Ellison pleaded guilty to charges of conspiracy to commit wire fraud, commodities fraud, securities fraud, and money laundering, she became the second most high-profile woman CEO to be brought down by greed and opportunity.

“I agreed with Bankman-Fried and others to provide materially misleading financial statements to Alameda’s lenders,” Ellison told Judge Ronnie Abrams, according to a transcript released later. “I am truly sorry for what I did. I knew that it was wrong.”

Ellison, who had been dating Bankman-Fried, became a topic of fascination because of her downfall, and the fact that she was a woman in the heavily bro-oriented crypto field. As reported:

“In the wake of the industry-shaking meltdown of FTX, Ellison has become something of a celebrity—her actions, appearance, and online presence examined in breathless articles claiming the leaders of FTX and Alameda all ‘dated each other’ and lived in a polycule in the Bahamas. Gawker dismissed her as ‘a chipmunk-cheeked Harry Potter superfan.’ As the New York Times reported in November, ‘on Twitter, amateur detectives have spent the last two weeks dissecting her life.’ “

While she could have earned a maximum sentence of 110 years in prison, prosecutors cut a deal for her testimony against Bankman-Fried. She hasn’t been sentenced yet and is on $250,000 bail. Her former colleagues, FTX cofounders Gary Wang and Nishad Singh, also pleaded guilty to fraud charges. Bankman-Fried has pleaded not guilty to 13 charges and is on house arrest in California on a $250 million bond.

Many of her colleagues were shocked that Ellison was involved in criminal activity, but as more women rise to upper echelons, it’s possible more of them will be involved in graft.

“When I picture her, I still picture Caroline as this petite, reserved, shy girl doing something low-energy or sedentary,” said a classmate from Stanford University. She did not come across, the person added, as “the Elizabeth Holmes of our class year.”

The article appears in the June/July 2023 issue of Fortune with the headline, “The Misadventures of Caroline Ellison.”