Did Caroline Ellison and SBF Cook Alameda’s Books to Save the World?

Before she worked at Alameda Research, Caroline Ellison did not think she’d break the rules of morality and also accounting. Of course, this was also before her ex-boyfriend and boss Sam Bankman-Fried convinced her that such mores were worth bending for the greater good.

The FTX chief’s creative ethics entered his criminal fraud trial during Wednesday’s plodding but emotionally charged direct questioning of Caroline. According to the government’s star witness, Sam was so engrossed in his conception of right and wrong that other people’s base principles (namely, upholding the truth and not stealing) were at best guidelines – if even that.

“The only moral rule that mattered to Sam was whatever maximized utility,” Caroline said. She testified Sam’s goal was to “create the greatest good for the most number of people.”

Therein lies the altruist. Sam styled himself a champion of the “effective altruist” movement, an offshoot of utilitarianism whose proponents seek to make as much money as possible and then give it to causes that might save the world. That was how Sam did it, at least. For a time, his crypto empire appeared to be rocketing the quirky quant toward maximum philanthropic velocity. He’d already started giving massive sums to politicians, charities and pet causes he thought could save humanity from itself.

(It came at the cost of his customers, according to prosecutors as well as “Enron John” Ray III. The crisis-era CEO of now-bankrupt FTX Group has spent the past 11 months on a highly lucrative global treasure hunt to claw back millions of donated dollars to make FTX customers whole.)

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Regardless … Sam’s maximal utility prompted Caroline to shelve whatever rulebook she’d followed before. “It made me more willing to do things like lie and steal” at Alameda, she testified. Her steady words (they later wavered) captured the jury’s unbroken attention – a rarity on a day mostly spent discussing balance sheets that almost put Judge Kaplan to sleep.

Caroline’s seven-hour long direct questioning delved into how things broke bad for the Empire…