The Misadventures of Caroline Ellison

How a young math genius lost her way in cryptocurrency, effective altruism, and Sam Bankman-Fried's corrupt empire.

- Courtney Rubin

AT A BLOND-WOOD TABLE IN A SERENE JAPANESE RESTAURANT on a tree-lined street in Murray Hill, Manhattan, the 26-year-old Caroline Ellison was asked a pointed question by one of her friends.

"Are you a millionaire or a billionaire?"

It was July 2021, and Ellison was soon to be appointed co-CEO of cryptocurrency trading firm Alameda Research, in San Francisco's Bay Area. On a visit back to New York City, she had met up with a couple of friends and her younger sister for dinner, followed by a walk and ice cream from Ample Hills.

The question was mostly a joke, the friend recalled to Fortune-but the friend (who has known Ellison since childhood, and asked not to be named) was also genuinely curious. Crypto was still on its pandemic-fueled upswing, nearing what turned out to be its peak valuation in November 2021, and there were plenty of newly minted crypto millionaires and billionaires being touted in the media. Ellison avoided answering, but the friend noted, "My read was that she was flattered I even thought 'billionaire.""

That wasn't because Ellison idolized the wealthy, the friend explained: "She values achievement. If she realizes she can be good at something, she's gonna go into it to win."

At the time of the dinner, Alameda was not widely known outside cryptocurrency circles. But a year later the firm Ellison ran would become notorious for the central role it played in the downfall of crypto exchange FTX, which was once valued at as much as $32 billion. Billions in customers' money was missing in what a U.S. attorney called "one of the biggest financial frauds in American history." FTX's cofounder, Sam Bankman-Fried, who once styled himself as "The White Knight of Crypto," became a public villain-and so did Ellison.

In December, Ellison pleaded guilty to charges of conspiracy to commit wire fraud, commodities fraud, securities fraud, and money laundering.