Despite SBF claiming he stepped away from running Alameda, shifting blame to CEO Caroline Ellison, the US government argues that SBF was still calling the shots
Justin Baer / Wall Street Journal :
Context & Ripple Effects
The dispute over who actually ran Alameda has been building since the collapse: Caroline Ellison told staff on November 9 that she, SBF, and two FTX executives knew FTX customer money was lent to Alameda, and earlier WSJ reporting on Alameda's early years showed SBF shrugging off risky-investment concerns as employees quit. SBF's answer — that he stepped back and Ellison ran the trading firm — puts her at the center of the government's case.
The government's counterargument, that SBF was still calling the shots, later proved durable: five hours of cross-examination produced no revelations or inconsistencies from Ellison, and the DOJ's aggressive posture extended to revoking SBF's bail over witness tampering. Control, not just knowledge, became the trial's central question.
First-order effects
- The blame-shifting strategy makes Ellison the government's pivotal witness, forcing her to testify directly against the man now claiming she was in charge.
- Prosecutors must prove de facto control rather than rely on titles, raising the evidentiary bar but targeting the person who built and funded Alameda.
Second-order effects
- Ellison's own admissions — including the $100M–$150M in crypto transfers to Chinese officials to unfreeze roughly $1B in Alameda trading accounts — cut both ways, exposing her to scrutiny even as her testimony against SBF holds up under cross-examination.
- Other FTX and Alameda executives named in Ellison's November 9 staff account face pressure to cooperate with the government rather than share SBF's defense posture.
Third-order effects
- If the pattern holds, founder control of affiliated trading firms becomes the standard theory for prosecuting crypto executives who formally delegated titles, making 'I stepped away' a weak shield where funding and decision-making traces say otherwise.
The trend: Crypto fraud prosecutions are converging on proving de facto founder control over nominally separate entities, with cooperating lieutenants like Caroline Ellison as the decisive witnesses.