sbf: the virtue was the con

Was Caroline Ellison a Main Character or the Fall Girl?

How the 28-year-old CEO LARP-ed her way into the collapse of FTX.

Illustration: Zohar Lazar
Illustration: Zohar Lazar

The year is 2020,” the story begins. “Your heroine is working for a digital currency exchange that allows citizens of repressive regimes to move money anywhere in the world.” The author appears to be 25-year-old Caroline Ellison, writing in her now-deleted unsigned Tumblr diary a few months into the pandemic. (The Tumblr links directly to Ellison’s public Twitter account.) Protests against the Chinese government had engulfed Hong Kong, where she was working at the crypto-trading firm Alameda Research. “The authoritarian central government has just announced its plan to crack down on her scrappy, lovable city-state,” the story continues. “She must choose between staying and facing a future of increasingly harsh and technologically sophisticated censorship and repression, or venturing into the outside world.” At the end of the post, the narrator switches from the third person to the first. “Like yes, I took my current job with the plan of becoming a sci-fi protagonist. But even so this feels a little too on the nose.”

Ellison saw herself at the start of her hero’s arc, though she probably didn’t imagine that the journey would take her from trader to CEO to a possible accomplice in what could be the biggest financial fraud in history. When it was revealed that Alameda had used funds from FTX customers to cover its losses from risky trades, Ellison, “her voice shaking,” told employees in a meeting that she had known about the money transfers between the two companies, according to the New York Times. And yet Ellison’s exact role remains mysterious. In the bankruptcy filing submitted by FTX’s new CEO, she is not mentioned; her co-CEO, Sam Trabucco, had announced he was stepping down in August, and “it seems like they chose someone who knew enough but would basically be the fall person,” one crypto investor familiar with Alameda told me. “It seems like she was just an NPC” (a non-player character, in video game terms) who “was handed a bag of shit.” Or was she, as the rumored former lover of Sam Bankman-Fried, a protagonist just like him—not merely a Harry Potter fan sitting in the corner while the boys played billion-dollar poker? “It’s not like she was the conservative risk manager,” another person who interacted with Alameda and Ellison told me. “It was my sense that it was the Caroline show.”

Photo: @stillgray/Twitter

Multiple attempts to reach Ellison went unanswered. Meanwhile, the public has been parsing her social media record for clues as to who she is. Ellison was raised by two MIT professors, both in the economics department; a Tumblr post from 2018 describes a childhood “full of people making jokes about the efficient market hypothesis and the sunk cost fallacy.” As a teenager, she was a prize-winning mathlete, obsessed with Harry Potter, Jane Austen, and Taylor Swift. She matriculated at Stanford in 2012. A person who knew her called her “pretty quiet, timid, pasty white.” But, they added, she was someone who “shouldn’t be underestimated.” Many of the smartest at the university were competitive to the point of nastiness. “She wasn’t one of the bullies,” another acquaintance said. “She was in her own sci-fi-fantasy literature world” in which she was “one of the ‘cool,’ ‘smart’ members of Gryffindor.”

At Stanford, Ellison was involved in a club devoted to Effective Altruism, the philosophical movement whose adherents attempt to do maximum social good by using evidence and reason. Ellison seems to have joined Rationalist Tumblr, a.k.a. “rattumb,” where she engaged in long debates over ethical hypotheticals, whether some kinds of negative outcomes (and how many) can be tolerated to achieve a larger goal. Some of these posts are tagged “crypto social conservative blogging” and “not sj go away,” with sj standing for “social justice.” (One highly circulated post from 2021 posited: “Is it infinitely good to do double-or-nothing coin flips forever? Well, sort of, because your upside is unbounded and your downside is bounded at your entire net worth.”) She also began going to LARP events. “I just like excuses to spend a few hours implementing evil schemes while wearing a corset,” one 2015 Tumblr post read. Another post suggests that LARPing functioned as a philosophical exercise: “I like roleplaying characters with a … limited circle of concern? Think nationalist or speciesist or just straight up selfish. I find it really satisfying to openly engage in those modes of reasoning because I feel like they’re there in the back of my head all the time and it takes effort to ignore them and think about what the actual right thing is.”

In 2018, Ellison took a job as a trader at Alameda, becoming a member of SBF’s Hong Kong–based “cult of degens,” as the investor who called her an NPC puts it: “degenerate traders, more like gambling traders.” Haseeb Qureshi, another crypto investor and effective altruist, says Alameda’s reputation was “so blistering, so cutthroat. Alameda would ruthlessly dump tokens, short things, sell things whenever they wanted to.” In a podcast from last year, Ellison admits to being skeptical of Alameda’s going all in on the “DeFi summer” of 2020 (she previously called decentralized finance “sketchy” and “weird”) and that there was an argument at the company about trading on decentralized platforms at all. “I lost that argument, I guess,” she says. She describes a breakneck environment in which “the process for doing things is someone suggests something and then someone codes it up and then releases it.” (It was in April 2021 that she tweeted, now tabloid fodder, about taking amphetamines.) That fall, Ellison was promoted to co-CEO with Trabucco after SBF stepped down to run FTX. Trabucco, whom one person called “absurdly risk loving,” was Alameda’s public face, giving interviews and tweeting about tungsten cubes.

“We’re probably not the best at management,” Ellison said on the FTX podcast in 2021 with a nervous giggle. Qureshi says multiple former Alameda employees told him it was “a shitshow”: “There’s no control, they run wild, there is very crappy accounting. It’s a circus.” Nonetheless, Ellison seemed to be stepping into her newfound power. “I love it when fiction has representation of literal girlbosses. Like women managing people and running stuff,” a Tumblr post from August 2021 read. “Like omg it me.” She might not have been as loud as SBF, but she was fully on board, according to a person who met with Alameda leadership: “They drank their own Kool-Aid. They had a philosophical opposition to risk management.” The risk was worth the reward. “I didn’t get into this as a crypto true believer, and yeah it’s mostly scams and memes,” said a post from March 2022. “I have also come to see a real and pressing need for crypto.” She was making good money, after all, and was, as a good effective altruist should, ostensibly channeling it to worthwhile causes. In April, she was named an investor in the AI-safety company Anthropic.

Amid the fallout, the public seized on the revelation that Ellison was reportedly in a relationship with SBF from time to time, possibly as a member of an FTX “polycule,” based on rumors reported on CoinDesk. Much was subsequently made of Tumblr posts that discussed polyamory, though more recently the anonymous Tumblr user suggested that she was “ultimately looking for a long-term monogamous relationship.”

Ellison’s last tweets on November 6 chirpily disavowed that anything was really so wrong at Alameda. As one trader who met Ellison and made a killing in 2021 said, “Crypto really fucked with a lot of peoples’ perceptions of money. A lot of stuff doesn’t feel real. And if you add speed …” If SBF treated managing billions of investors’ money like a game, for Ellison it might have been a LARP, each risk an exercise in playing a character in a scenario, calculating how far to go and what behavior could be justified. Maybe that’s why she liked LARPing in the first place. As one Tumblr post said in 2018, the year Ellison took the job, “I guess it’s just fun to be a bad person for a few hours.”

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Was Caroline Ellison a Main Character or the Fall Girl?