FTX Founder and Alameda Research CEO Embroiled in Scandal Over Alleged Misappropriation of Funds

Jack ObrienJuly 21, 2023

7 1 minute read

Alameda Research CEO Caroline Ellison is facing serious allegations of mismanagement and financial misconduct at crypto exchange FTX, which spectacularly imploded late last year. As part of FTX’s latest lawsuit against its founder and CEO, Sam Bankman-Fried (SBF), it is alleged that Ellison paid herself millions of dollars in a single bonus payment, despite being aware of massive financial discrepancies within the company’s finances.

The legal filing claims that Ellison knew about significant holes in FTX’s finances eight months before the firm’s cashflow problems became public knowledge. Instead of addressing the issues, she reportedly orchestrated a series of transactions, including transferring $22.5 million from Alameda to her personal FTX account, eventually paying herself a multimillion-dollar bonus.

Moreover, the lawsuit alleges that on separate occasions between 2021 and 2022, Ellison misused company funds to award herself other substantial bonuses, which the court deems unjustifiable considering her extensive misconduct.

FTX filed for voluntary Chapter 11 proceedings in the United States eight months after Ellison’s major bonus payment, and the company’s downfall left SBF’s reputation severely damaged. His entire $16 billion fortune was reportedly wiped out, marking one of the greatest destructions of wealth in history. Ellison herself accumulated a significant fortune during her tenure at Alameda, receiving $6 million in payments and loans over the life of the company.

In a diary entry seen by the New York Times, Ellison expressed feeling overwhelmed and unhappy with her role as CEO of Alameda, stating that she didn’t feel well-suited for the position. Later, during a hearing, she admitted to knowing her actions were wrong and illegal, leading to her guilty plea and agreement to cooperate with authorities.

As legal proceedings continue, the situation has cast a dark shadow on the once-respected figures of FTX and Alameda Research, leaving their reputations tarnished and their financial dealings under intense scrutiny.