The former CEO of Alameda Research, Caroline Ellison, has spent her entire professional career as a trader. While a junior studying math at Stanford University, Ellison took her first of two internships with Jane Street, a Wall Street hedge fund known for its heavy use of algorithms, where she excelled. She put off a one-year master’s degree program to join the firm full time.
“Trading is the biggest thing that allowed me to excel in trading,” Ellison said in an interview for Alameda’s podcast in 2021. For anyone else, the statement would be a tautology, but for the bookish Ellison, who came into crypto as a skeptic, it was never obvious that she’d lead one of the most influential digital asset hedge funds.
See also: Who's Who in the FTX Inner Circle
After a year and a half on Jane Street’s equities desk, Ellison made a “lateral” move to Alameda, after meeting her former Jane Street colleague Sam Bankman-Fried for coffee in the Bay area. She has said Bankman-Fried was initially cagey about what Alameda did. She came aboard with “more experience than a lot of Alameda traders at the time,” she said.
Alameda, at its founding, was a market maker for low-liquidity altcoins. It took a market-neutral approach to the industry, but eventually began taking a more participatory role in crypto and increasingly bullish or bearish leveraged bets on specific coins. This includes yield farming on decentralized finance protocols, she said. She had never used the Ethereum wallet MetaMask before DeFi Summer.
While the details are yet unknown, it seems like the cracks in Bankman-Fried’s crypto trading empire appeared first at Alameda following the collapse of the LUNA coin bubble. In a May 25 podcast with Spanish-language El Momento, Ellison now infamously said many of her trades relied on “elementary school math” and gut.
In October 2021, Ellison was appointed as co-CEO of Alameda with Sam Trabucco after Bankman-Fried resigned from the firm in an effort to put distance between the exchange and trading shop he founded. She has described her role as “broad.” Ellison became sole CEO in August, following Trabucco’s departure from the firm.
Like many within the FTX-Alameda orbit, Ellison was an “effective altruist,” or someone who tries to maximize the good they can do by making money and spending it based on supposedly rational calculations. Ellison is thought to be the person behind a blog called “World Optimization,” which covered topics popular in the California Rationalist community including polyamory and race science, Futurism reported.
Until this week, Ellison lived with nine other FTX or Alameda colleagues in Bankman-Fried’s $30 million penthouse in the Bahamas. She reportedly paid SBF rent, and was occasionally in a romantic relationship with him. In 2021, Ellison tweeted about recreational stimulant use.
“Young people tend to be too risk averse,” Ellison said in a more recent Alameda podcast episode.
The Wall Street Journal recently reported that Ellison told Alameda staffers in a video call that she was one of four people aware of the decision to send FTX customer funds to Alameda, to help the fund meet its liabilities. In early November, CoinDesk’s Ian Allison reported that Alameda was structurally insolvent as much of the money it had on hand was illiquid altcoins, particularly FTX’s exchange token, FTT.
Ellison has been a fan of the Harry Potter series since childhood, and has written LARPs (live action role playing games) in her free time. She was reportedly working on writing a novel.
Adding to the intrigue: Ellison’s father, Glenn Ellison, is the Gregory K. Palm Professor of Economics at Massachusetts Institute of Technology. He is the head of the economics department and was in this role when current Securities and Exchange Commission Chairman Gary Gensler famously taught an MIT course on blockchain. Her mother, Sara Fischer Ellison, is also an economics department lecturer at the university.
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