Forbes getting dragged for calling Caroline Ellison 'Math Whiz' as Sam Bankman-Fried personally took $300M out of the $420M raised in FTX 2021 funding round KossyDerrickBlog KossyDerrickEnt


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Friday, November 18, 2022

Forbes getting dragged for calling Caroline Ellison 'Math Whiz' as Sam Bankman-Fried personally took $300M out of the $420M raised in FTX 2021 funding round

Information reaching Kossyderrickent has it that Forbes getting dragged for calling Caroline Ellison 'Math Whiz' as Sam Bankman-Fried personally took $300M out of the $420M raised in #FTX 2021 funding round. (Read More Here).

The letter cited revelations by newly-installed FTX CEO John J. Ray, who in court filings this week described a “complete failure” by the crypto company to maintain financial controls. Ray said the failures at FTX eclipse even that of Enron, the infamous company whose liquidation he oversaw in the early 2000s.

Krishnamoorthi said he’s “distressed” comments Bankman-Fried has made since the FTX bankruptcy, including an interview with Vox this week where the former FTX boss said he “didn’t mean” to “do sketchy stuff,” but that “each individual decision seemed fine and I didn’t realize how big their sum was until the end.”

Bankman-Fried was a face of the crypto industry and had emerged as a white knight for struggling companies. He was also a leading campaign contributor to Democrats during the 2022 election cycle.

Earlier this week, Democratic Sens. Elizabeth Warren and Dick Durbin demanded FTX and Bankman-Fried turn over a trove of documents that will shed light on the collapse, including balance sheets and details on bailouts given to other crypto firms.

"I would tell her to be less risk-averse and believe in herself more," she wrote in a previously unpublished application for Forbes’ 30 Under 30 list.

A year later, that advice reads as a stunningly ironic epitaph for one of the biggest financial catastrophes in recent memory, one Ellison herself presided over. Last week, FTX, once the second largest crypto exchange in the world, collapsed into a $32 billion pile of risky bets and worthless tokens that the former Enron attorney who has taken over FTX said is the biggest “failure of corporate controls” he’s seen in his career. And Alameda, the company Ellison helms, was one of its architects.

It was Alameda’s speculative investments that were allegedly made by using FTX customer deposits, taking billions without users’ knowledge. And it was Alameda that reportedly covered up the scheme because the hedge fund ensured the assets it was trading on FTX steered clear of its own balance sheet. In a bankruptcy filing, FTX estimates it will have more than one million creditors seeking damages — FTX’s rank and file, who reportedly were convinced to pour their life savings into the platform, among them. The filings also show that Alameda Research handed out three personal loans to FTX executives, with Bankman-Fried borrowing $1 billion. And while FTX CEO Sam Bankman-Fried owned 90% of the trading firm, it was Caroline Ellison at Alameda’s helm when both companies collapsed.

Krishnamoorthi is requesting detailed information on the liquidity crisis facing FTX, the sudden decision to declare bankruptcy and what the company plans to do to “ensure that every single dollar is returned to American consumers who placed their trust in your company.”

The subcommittee, which had already launched an investigation into the crypto industry in August, asked for information and documents by December 1, including all internal documents and communications since 2021 related to FTX’s liquidity problems, balance sheet, customer funds, cryptocurrency holdings, money owed to customers and handling of customer funds.

“FTX investors and the American people demand answers,” Krishnamoorthi said.

Neither FTX nor a lawyer representing Bankman-Fried responded to a request for comment.

Before she found herself at the center of crypto’s most massive meltdown, Caroline Ellison was a star student. She was a Harry Potterhead. She was a camp counselor. She was a writer of live action role playing scenes. Ruth Ackerman, a math professor who taught Ellison at Stanford 10 years ago, called her former student “bright, focused, very mathy” — a challenge, she said, to reconcile with Ellison becoming wrapped up in one of the largest alleged frauds of the past decade.

“The first I heard of the current controversy was when people started contacting me on LinkedIn, telling me to withdraw my endorsement of her skill as a computer scientist,” Ackerman told Forbes.

Now, as the carnage of FTX’s collapse comes into clearer focus, and multiple U.S. agencies — including the Securities and Exchange Commission and the Department of Justice — have announced investigations, Ellison seems headed towards a nadir that belies her pedigree and the experiences of people who knew her in a past life, a risk taken and gone catastrophically bad.

“Being comfortable with risk is very important,” Ellison said on a podcast in May. “There are a lot of people who are very smart, but aren’t good, necessarily, at the messy world of trading—especially crypto. 

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