Why did Caroline Ellison do this?

Sam Bankman-Fried's story was obvious enough: Shakespearean arrogance leading to tragedy. But Caroline Ellison, the former CEO of Alameda Research and key witness in the FTX trial, has been puzzling me for some time. Now, after her conviction, I believe what she did is stranger and perhaps sadder.

Ellison spoke on her own behalf and began by apologizing to everyone she had hurt. “I think on some level my brain can't even begin to comprehend the extent of the suffering I've caused,” she said. “That doesn't mean I'm not trying. So to all the victims and everyone I've hurt, directly or indirectly, I'm so, so sorry.”

Ellison went on to say that she always considered herself an honest person – and that she couldn't imagine being here in 2018. “The longer I worked at Alameda, the more my self-worth became inextricably linked to what Sam thought of me, and the more I subordinated my own values ​​and judgments to his,” she said.

There was something cult-like about FTX and its sister company Alameda. The crypto industry is always on, which often leads to sleep deprivation among crypto traders. Many traders, including Ellison, rely on stimulants like Adderall, which suppresses appetite and relieves fatigue. And Ellison never actually left work — instead, she went back to an apartment she shared with her friends and colleagues. Leaving would have meant abandoning her nearest and dearest. She was, as she put it, isolated. “At each stage of the process, I found it harder and harder to break free and do the right thing,” she said.

And then there was her on-off relationship with Bankman-Fried. According to her attorney, Anjan Sahni, she met Bankman-Fried in college and had a crush on him “from the start.” At one point, her whole world revolved around whether or not she made him happy, leading to journal entries like, “Sam doesn't love me because I'm not good enough for him.” She went on to write, “I can become good enough for him” by working harder, among other things. Some of this can be chalked up to her inexperience; those of us who are older know that a job — or, for that matter, a relationship — doesn't work that way.

The letters submitted on Ellison's behalf emphasized that she was a good, kind person – with particular attention to her volunteer work, the money she donated, her selflessness and her perfectionist streak. Cults tend to attract good people, smart people, people who want to make the world a better place. And we know that Ellison was already associated with something cult-like – effective altruism – which also claimed to make the world a better place.

We also know that Ellison came clean when she was caught. That was one reason her testimony against Bankman-Fried was so “damaging,” said prosecutor Danielle Sassoon, who called for a lenient sentence for Ellison. She was credible “because of her candor and her refusal to downplay her own role or avoid the most humiliating aspects of her behavior,” Sassoon said. “Unlike Bankman-Fried, she is not cunning. There is no evidence that she was motivated by greed or that risk-taking or lust for power is part of her nature.”

Even at the sentencing, Judge Lewis Kaplan referred to Ellison's testimony. “I've seen a lot of cooperators in 30 years,” he said. “But never one like Ms. Ellison.” Her testimony was consistent and damning; she didn't try to exonerate herself. Especially when it came to the fateful spreadsheets – the falsified financial statements that essentially sealed Bankman-Fried's fate – it was Ellison who found the document and brought it to the prosecutors' attention. It was as if she wanted to get an A grade in her cooperation with the government.

So what was Ellison's character? The journals she submitted with her sentencing show that she was trying hard to get better at work, and include resolutions like “Take some time off from work and detox from Adderall.” Ellison seems focused on improving herself as much as possible, giving herself bullet-point advice like “Try to do small things and turn that into stronger confidence” and “Give myself positive feedback regularly.”

Listening to her during her testimony talk about decisions she made during her time in Alameda was like watching a character in a horror movie make decisions that play right into the hands of the killer. The willingness to be both selfish and disobedient would have saved her at any point. “For some reason I don't understand, Mr. Bankman-Fried had your kryptonite,” Kaplan said.

When Ellison joined Alameda Research, for example, she found that Bankman-Fried had not been entirely honest with her about the state of the company. It had just undergone mass layoffs and lenders had taken millions. It's easy to imagine someone else being fired – after all, Ellison's old job at Jane Street would likely have opened doors to many other opportunities if she had survived the brief period of unemployment.

But she didn't. Instead, she stayed, as she herself testified, because Bankman-Fried had convinced her that lying and stealing in the service of the common good was OK. Little by little, she got used to dishonesty, until she was sending her lenders false financial statements and accepting client money. And when her diaries – both published in The New York Times and filed as part of her sentencing – show that she wanted to make Bankman-Fried happy.

Perhaps Kaplan had trouble understanding why Ellison was drawn into this, but I think I have a clearer picture now. Give Ellison an authority figure, and she will try to please them—behaving as obediently as possible, worrying about how to improve, and making her happiness depend on how close to perfection she gets. A straight-A student, a reliable co-worker (and co-conspirator), and—eventually—an unparalleled cooperator. If you can get this far by being a good girl, I recommend being bad.