Major Bonus amidst FTX’s Financial Crisis: Caroline Ellison

Updated: 22 July 2023

Disclosure

Don’t invest unless prepared to lose all the money you invest. This is a high-risk investment, you shouldn’t expect to be protected if something goes wrong.

Join Our Telegram channel to stay up to date on breaking news coverage

Late last year, the crypto exchange FTX met a drastic end, pulling its trading partner, Alameda Research, down with its crisis. This collapse led to significant legal challenges targeting the top brass of FTX, including its founder and renowned CEO, Sam Bankman-Fried, popularly called “SBF”.

Legal complaints stemming from FTX’s financial troubles claim that Caroline Ellison, CEO of Alameda Research, transferred millions between different accounts, eventually depositing them into her own, all this just a few months prior to FTX’s bankruptcy announcement.

Given the significant misconduct on Ellison’s part, no ‘bonus’ could ever be deemed appropriate.

The most recent lawsuit against FTX names SBF and his senior colleagues. The filings from Thursday suggest that Caroline Ellison had, as early as March 2022, gauged FTX’s financial deficit to be upwards of $10 billion. Interestingly, this assessment was done shortly after Ellison moved a staggering $22.5 million from Alameda, routing it through various accounts before it finally landed in her personal FTX account. By the end of March, records indicate she shifted $10 million, termed as her “bonus”, into her own bank account, investing it in an undisclosed A.I. safety and research firm.

The litigation labels this significant amount as “misappropriated Debtor funds”. Furthermore, between 2021 and 2022, there are allegations of Ellison misallocating company assets to reward herself with other bonuses of a similar scale. The lawsuit from Thursday argued, “Given the significant misconduct on Ellison’s part, no ‘bonus’ could ever be deemed appropriate.”

In the months that followed Ellison’s major bonus move, FTX initiated Chapter 11 procedures voluntarily within the U.S. boundaries. This action was a result of SBF, Ellison’s ex-boyfriend, unsuccessfully attempting to gather urgent funds to address the financial loopholes in FTX’s books.

SBF, who was previously held in high esteem and often likened to philanthropic figures like Warren Buffett, faced a sharp decline in his reputation due to the rapid downfall of FTX. Reports from Bloomberg indicate that SBF’s massive $16 billion assets were decimated, establishing it as one of history’s most significant wealth losses. The zenith of his wealth once touched $26 billion when he was just 31.

Challenges Faced by Ellison in her CEO Position

Despite the controversies, Ellison, at the age of 28, had amassed a significant wealth during her tenure leading Alameda. FTX’s bankruptcy records highlight her earnings, revealing payments and loans that summed up to $6 million throughout her association with the now-defunct cryptocurrency exchange. By the time of FTX’s demise, she reportedly had a net worth of $15 million.

I was fully aware that my actions were wrong and unlawful.

Yet, recently disclosed details show Ellison’s apprehensions about her leadership capabilities. The New York Times accessed a diary entry of hers stating, “I often feel overwhelmed in my role at Alameda. I don’t think I’m particularly skilled or apt for this job.” She expressed her yearning to disconnect from work, confessing, “All I desire is to go home, disconnect my phone, relax with a drink, and escape from everything.”

Ellison’s acknowledgment of her own mistakes came in a December court appearance where she stated, “I was fully aware that my actions were wrong and unlawful.” Before finalizing her plea deal and committing to collaborate with the law enforcement agencies, Ellison was reportedly looking at a potential prison term of 110 years for her actions.