New York Magazine

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.

- by bridget read

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-yearold Caroline Ellison, writing in her nowdeleted 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 imaging ine 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 BankmanFri­ed, 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.”

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 prizewinni­ng 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 role-playing 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 onboard, 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 people’s 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 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 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.”

“It’s not like she was the conservati­ve risk manager. It was my sense that it was the Caroline show.”

There has not been a bad actor in history,” says Rocky Schwartz, “who hasn’t been able to couch their conduct behind some meaningful and generally positive ideology.”

It’s 9 p.m. at a bar in Kips Bay. Schwartz, 29, is drinking Sprite and pondering the role her philanthro­pic movement might have played in the collapse of Sam Bankman-Fried’s empire—and the boomerang possibilit­y that his downfall is about to wreak financial and reputation­al havoc on her field. She’s the executive director of Effective Altruism NYC, which is funded by the Centre for Effective Altruism, which is in turn supported by a $14 million grant from Bankman-Fried’s foundation. Or at least it was. Schwartz says she’s still hopeful that the good of EA can be quarantine­d from the bad of SBF. “There is a reason why, a decade into effective altruism, this is the most disastrous thing we’ve seen happen,” she says.

Schwartz’s predecesso­r at Effective Altruism NYC isn’t at the bar, but I reach him by phone. “I totally looked up to this guy, this motherfuck­er who I hate now,” he says of Bankman-Fried. “Three weeks ago, I would have sung his praises.” He’s been running a crypto hedge fund that caps his salary at $70,000 and donates most of its profits to charity. It relied on FTX, and when the exchange collapsed, the fund lost 80 percent of its holdings. He asks me not to print his name. “I’m still licking my wounds, and I’m sheepish and embarrasse­d.”

While most of the internet has experience­d FTX’s meltdown with Schadenfre­ude, the effective altruists are grieving. According to origin myth, Sam BankmanFri­ed forged his career according to a core principle of this belief system: Get as rich as possible in order to give away as much money as possible. Now, untold millions in EA-driven grants have been vaporized, and true believers are wondering how much responsibi­lity they bear. What began about a decade ago as an ascetic movement of kidney-donating mosquito-net evangelist­s had lately morphed into something more sci-fi backed by a token-minting benefactor and absorbed with doomsday-prevention schemes. Had effective altruism’s “consequent­ialism” bent— crudely, the idea that the ends justify the means—led Bankman-Fried to take extreme risks in the service of some eventual greater good? Was it all just a fig leaf he used to mask unethical behavior, as he implied in an explosive interview with the Vox journalist Kelsey Piper? On the radically transparen­t Effective Altruism Forum, some posters flogged themselves for being duped by BankmanFri­ed while others scrambled to rationaliz­e his behavior. A user called Geuss posited that by making himself look as guilty and unprincipl­ed as possible to Piper, Bankman-Fried was actually protecting the reputation of effective altruism, which could now distance itself from him more easily. (Piper is an effective altruist, and Vox—which, along with this magazine, is owned by Vox Media—has an EA-inspired vertical that received a reporting grant from Bankman-Fried’s family foundation.) Another poster suggested the movement should have at the very least funded a kind of ombudsman: “I think Is SBF doing fraud? was worth at least one person thinking about full time.”

At the bar, Schwartz is joined by two other effective altruists, who are drinking hard ciders: Vaishnav Sunil and Jacob Eliosoff. Sunil, 30, was the president of the effective-altruism club at MIT’s business school before he graduated in May. He’d decided to abandon a career in venture capital to work on pandemic preparedne­ss and remains unshaken in his conviction­s about the movement’s virtues. Eliosoff, 48, runs a crypto investment fund and is still motivated by EA’s “earn to give” philosophy. That said, he suggests to Schwartz that Will MacAskill—the Oxford philosophe­r who leads the effective-altruism community and until recently co-led the Future Fund, a major branch of the FTX Foundation— must feel unbearably humiliated. Schwartz rejects the word.

“In my eyes, it’s more heartbreak­ing than humiliatin­g because I think people are constantly blindsided by the actions of people they’re very close to,” she says. “People who have been married 40 years find out their spouse has cheated the entire time.”

Even before the implosion of SBF, fissures had developed in the movement over its newfound wealth—and its pivot away from prosaic issues like animal rights to splashier “long-termist” concerns over, say, artificial intelligen­ce. Eliosoff argues it’s a mistake to draw a connection between those debates and the FTX debacle. The issue is his possibly “committing major crimes, defrauding customers of $8 billion, lying constantly,” he says. “These are deeper issues than spending too much money on your mansion. You can say maybe the mentality of one led to the other in some way, but they are, to me, fundamenta­lly pretty separate.”

Anyway, Schwartz says, despite all the earn-to-give talk, Bahamian compounds are the exception in her world. “I can’t think of any EAs who are living in the lap of luxury,” she says. “I can think of many, though, who are buying dried beans instead of canned to have more money to donate.” On November 10, MacAskill and his team posted on the EA forum that the Future Fund was unlikely to honor many of its committed grants. Schwartz says a planned EA co-working space in New York may be on hold. “I think for a lot of us,” she says, “the thought is really just, We have a much more limited ability to alleviate suffering and improve the world than we thought we did a week and a half ago.”

The jukebox is playing Miley Cyrus’s “Prisoner.” Schwartz clarifies that while she feels betrayed, she isn’t here to pass judgment on Bankman-Fried. “I am not making the claim that Sam is fundamenta­lly bad. I think the biggest lesson here is that people are unpredicta­ble and people who are in intense circumstan­ces are even more unpredicta­ble,” she says.

Some of his recent Twitter missives, she adds at another point, “seem very clearly like the communicat­ions of someone who is not in their right mind.”

“That’s actually a very mature perspectiv­e that I hadn’t even considered,” Sunil says.

“Maybe that’s too charitable,” Schwartz says.

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