Fallen crypto king Sam Bankman-Fried ignored rules like “don’t lie” and “don’t steal” because they didn’t fit into his “utilitarian” moral code about how to achieve the “greater good,” his ex-girlfriend testified at his fraud trial Wednesday.
“He said that he was a utilitarian and he believed that the ways that people try to justify rules like ‘don’t lie,’ ‘don’t steal,’ under utilitarianism didn’t work,” Caroline Ellison, 28, told jurors in Manhattan federal court.
Bankman-Fried has been charged with stealing more than $8 billion in user funds stored at his crypto exchange FTX to plug losses at his hedge fund Alameda Research.
He told Ellison, his on-and-off girlfriend, that “the only moral rule that matters was what maximized utility” — meaning “whatever generates the greatest good for the greatest number of people.”
The accused fraudster’s cavalier attitude toward lying — so long as he could achieve his “utilitarian” goals — made her more likely to bend the truth as well, she said.
“It made me more willing to do things like lie and steal over time,” Ellison admitted.
The Stanford-educated math whiz — who served as CEO of Alameda during FTX’s November 2022 collapse — also testified that she followed Bankman-Fried’s orders to doctor balance sheets sent to a lender that hid Alameda’s multi-billion-dollar dip into FTX users’ wallets.
“I really didn’t want to be dishonest, but I also didn’t want them to know the truth,” Ellison said of the falsified files sent to crypto lending firm Genesis.
Genesis had been a heavy investor in Alameda, and at the time was considering whether to pull out $500 million of its funds held with Bankman-Fried’s company. Alameda, Genesis and FTX all later declared bankruptcy.
Ellison has already matter-of-factly told jurors that the disgraced crypto titan bears the blame for deciding to steal the funds. She also broke down crying Wednesday when recounting how she felt when the truth of Alameda using FTX user funds to plug its losses came out — during what she called “the worst week of my life.”
“I felt a sense of relief that I didn’t have to lie anymore and could take responsibility for what I had done,” Ellison testified, looking down at the witness table.
Prosecutors also revealed that Ellison responded with a sad face emoji after learning, on a group text with Bankman-Fried and FTX engineering chief Nishad Singh, that customers were pulling out funds at a rate of $120 million per hour.
“Oof,” Bankman-Fried responded after Ellison sent her sad face, a trial exhibit showed.
Ellison will be cross-examined by Bankman-Fried’s attorneys on Thursday.