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SBF's ex-girlfriend gives explosive testimony against disgraced crypto mogul

AILSA CHANG, HOST:

Caroline Ellison has always been seen as the star witness for the U.S. government in the trial of Sam Bankman-Fried. She was a member of Bankman-Fried's inner circle, and she is also his ex-girlfriend. That gives her a unique insight into the disgraced crypto mogul better known by his initials, SBF. And today she delivered some explosive testimony against him. NPR's David Gura joins us now from outside the federal courthouse in Manhattan. Hi, David.

DAVID GURA, BYLINE: Hey, Ailsa.

CHANG: So what happened inside that courtroom today?

GURA: Well, Caroline Ellison, who is 28 years old, is seen as a key witness because she used to head this hedge fund that Sam Bankman-Fried co-founded, which was at the heart of SBF's crypto empire. It was called Alameda Research. Now, the U.S. government has alleged there was this massive conspiracy orchestrated by Bankman-Fried to defraud customers, investors and lenders. And Ellison has pleaded guilty to being a part of that scheme. She's a cooperating witness for the prosecution.

So, Ailsa, I got to the courthouse four hours early, along with other reporters, members of the public who lined up before dawn to see her testify in person. Dozens more watched it in overflow rooms at the courthouse. I did get in the room. And when the prosecution called Ellison to the witness stand, everyone turned to look. These two giant doors opened at the back, and Ellison was escorted down the center aisle to the witness stand past reporters. Lawyers were there, including the U.S. attorney for the Southern District whose office is trying this case, and the parents of Ellison's ex-boyfriend - they were also looking on.

There was this dramatic moment on her first day of testimony. Right after Ellison took the stand, one of the prosecutors asked her to point out the defendant to the jury. And we watched Ellison kind of stand up, squint, and then really scan the entire room looking for him. It took Ellison maybe 30 or 40 seconds before she finally laid eyes on SBF, who was sitting at the defendant's table behind a laptop. Now, obviously, these two people know each other very well, Ailsa. But a lot has happened since they last saw each other, now almost a year ago. And I will also note, his hair is cut way shorter than it used to be.

CHANG: So maybe she didn't recognize him at first. OK, so what exactly did Caroline Ellison say in her testimony today?

GURA: Well, the stakes here are so high because of what Caroline Ellison knows. Yes, she was part of Sam Bankman-Fried's inner circle. But she also had this on-again, off-again personal relationship with him going back years to when she was an intern on Wall Street, and he was a trader at the same firm. Now, Caroline Ellison alleged that even though she was officially the head of this hedge fund, it was Bankman-Fried who continued to call the shots even after he stepped down from running it full time. Ellison alleged SBF directed her to use more than $10 billion in customer money to pay for all kinds of things, including investments in risky startups and to pay back debts.

Ellison described the immense pressure she was under - of how a lot of the activity she engaged in was misleading and dishonest. Those are her words. And she started to tear up at the end of her testimony when she recalled how relieved she felt when everything finally fell apart last November. You know what she dreaded for months, Ailsa - the collapse of Bankman-Fried's crypto companies - finally had happened.

CHANG: Exactly. All right, so what happens next at this point?

GURA: We are in week two of what is expected to be a six-week trial. Caroline Ellison's testimony continues tomorrow with cross-examination by the defense. Sam Bankman-Fried's lawyers have indicated they're going to argue Ellison was responsible for the collapse because she was not equipped to lead Alameda. In effect, she made massive mistakes, and Bankman-Fried was so busy running FTX and meeting with lawmakers and regulators, he just wasn't able to keep tabs on what was going on at a hedge fund. If Ellison's testimony today is any indication, I think we can expect much more drama when she's questioned by Bankman-Fried's defense attorneys tomorrow.

CHANG: To be continued. That is NPR's David Gura outside the federal courthouse in Manhattan. Thank you so much, David.

GURA: Thank you.

(SOUNDBITE OF MOONSTARR'S "DETRIOT (MIXED)") Transcript provided by NPR, Copyright NPR.

NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.

Based in New York, David Gura is a correspondent on NPR's business desk. His stories are broadcast on NPR's newsmagazines, All Things Considered, Morning Edition and Weekend Edition, and he regularly guest hosts 1A, a co-production of NPR and WAMU.