Ellison's Testimony 'Extremely Strong,' Will Be 'Very Hard For The Defense To Overcome': Ex-Federal Prosecutor

Caroline Ellison, the former CEO of the now-bankrupt crypto hedge fund Alameda Research, gave an "extremely strong" and "devastating" testimony that, when combined with other testimonies, "will be very hard for the defense to overcome," a former federal prosecutor said.

Ellison, the government's star witness in the fraud case against Sam Bankman-Fried (SBF), the crypto mogul who founded FTX and Alameda Research, took the stand for over a day and a half in a federal court in Manhattan, delivering her testimony.

In her testimony, which at times became tearful, during the second week of one of the biggest fraud trials in the history of the U.S., Ellison accused her former boyfriend of being the mastermind behind a joint effort to steal billions of dollars from customers, investors and lenders.

"Ellison's testimony that SBF directed her to take FTX customer money was devastating. Her testimony was extremely strong standing alone. And when combined with the testimony from the two other cooperating witnesses, it will be very hard for the defense to overcome," Sara Paul, a former federal prosecutor in the U.S. Attorney's Office for the Southern District of New York and currently a partner at law firm Eversheds Sutherland, told International Business Times in an exclusive interview.

Ellison is a crucial witness for the prosecution due to her intimate knowledge of both the crypto empire and the defendant, who currently faces seven criminal charges that could result in a lifelong prison sentence.

Paul, who is now the Co-Global Head of Corporate Crime and Investigations at Eversheds Sutherland, also thinks that if the jury believes Ellison's testimony, it could lead to a conviction for Bankman-Fried, highlighting the strength of the 28-year-old Stanford University graduate's testimony.

"I think the jury could decide to convict him based on Ellison's testimony alone if they credit her testimony," Paul told IBT when asked if any of the witnesses' testimony in the second week of the fraud trial was significant enough to convict the former Jane Street trader who became one of the mega-donors in the political arena of the U.S. over the past years.

Ellison also testified in court that they bribed Chinese officials under Bankman-Fried's direction. Paul explained that despite the bribery charge not being included in the current legal proceedings, the prosecution might call the former CEO of Alameda Research to take the stand.

"The bribery charge against SBF has not been dismissed. The government agreed that he could be tried later on the bribery charge and four other charges that were brought against him following his extradition from the Bahamas. His lawyers challenged the legality of the five newer charges on the grounds that they were not part of the original extradition deal from the Bahamas," Paul said, adding, "To give the Bahamian court an opportunity to review that challenge, the government agreed to sever these five charges from the charges in the original indictment and have them heard later."

Paul, who has been representing an Ad Hoc Committee of Non-US Customers of FTX to establish non-US customer's interests and to litigate related legal issues, also noted that if the five newer charges move forward in March next year, the prosecution might call Ellison to testify about how they bribed the said foreign officials.

"SBF is currently scheduled to be tried on these five charges in March 2024. If that trial goes forward, I would certainly expect Ellison to testify about how they bribed Chinese officials," Paul said.

Given her explosive and damning testimony, and despite Ellison sealing a plea deal with the government, there is still a chance for the defense to impeach her. However, Paul explained that there is a major problem for the defense in doing so.

"She has already pleaded guilty to multiple felonies. The defense had the opportunity to impeach her by suggesting she was motivated to lie about SBF to stay out of jail. The problem, though, is that she is corroborated by a substantial amount of additional evidence. It also does not sound like the defense was able to point out any meaningful inconsistencies in her testimony," Paul further said.

With everything that's been going on at the fraud trial, it remains uncertain what will happen next. However, Paul told IBT that "it will be very interesting to see whether SBF decides to testify in his own defense. Given how strong the government's case seems to be, SBF may feel that he needs to testify to try to create reasonable doubt about his criminal intent. This would be a risky move, however, because the government will have a lot of material to work with in cross-examination."

Ellison pleaded guilty to several criminal charges almost a year ago, including counts of fraud and conspiracy, and she agreed to work with the U.S. government in its case against Bankman-Fried.

In her testimony, the math major from Stanford and the daughter of a Massachusetts Institute of Technology economist, said that she and Bankman-Fried met at the Jane Street trading firm where she was working as an intern and Bankman-Fried was a trader.

Ellison is hoping to get leniency when the SBF trial ends in exchange for her cooperation.