Caroline Ellison lawyers up: Sam Bankman-Fried's ex picks Madoff prosecutor amid FTX fallout

Sam Bankman-Fried's ex-girlfriend has hired a legal team which includes a former top SEC official and a lawyer who investigated the Bernie Madoff Ponzi scheme.

Caroline Ellison, 28, has recruited the two heavyweights of financial law while prosecutors close in on Bankman-Fried over the multibillion-dollar collapse of his crypto trading firm FTX.

Ellison was CEO of Alameda Research, another company founded by Bankman-Fried which is accused of gambling with FTX client money on risky trades.

She will face the scrutiny of investigators who are looking at whether FTX misused billions of dollars in client funds by transferring them to Alameda. 

FTX filed for bankruptcy last month and about one million investors are owed a total of $10 billion, according to some estimates.

Caroline Ellison was CEO of Alameda Research, a company founded by Sam Bankman-Fried which is accused of wrongly using FTX clients' money to make risky investments

As prosecutors close in on FTX's top brass, Ellison has hired Stephanie Avakian (pictured), former director of the US Securities and Exchange Commission's Division of Enforcement

Ellison's legal team also includes Anjan Sahni, who led investigations into accomplices of Bernie Madoff. Avakian and Sahni are both lawyers at the firm WilmerHale

While Bankman-Fried has made countless public statements about the collapse of his company, Ellison has remained silent, triggering speculation she's trying to strike a cooperation deal with authorities. 

Bankman-Fried and Ellison were previously in an on-off relationship and lived together with eight other senior FTX and Alameda staffers at Bankman-Fried's $40 million Bahamas penthouse. 

Ellison has hired Stephanie Avakian, former director of the US Securities and Exchange Commission's Division of Enforcement, according to Bloomberg.

Her work in that role included overseeing enforcement against Ripple Labs, a blockchain company whose founders were accused of illegally raising $1.3 billion through an offering of unregistered digital asset securities.

Ellison has also brought in former federal prosecutor Anjan Sahni, who led investigations into accomplices of Bernie Madoff, the American fraudster who orchestrated the largest Ponzi scheme in history.

Sam Bankman-Fried's parents, law professors Barbara Fried and Joseph Bankman, are said to fear they'll be left financially ruined by their son's legal fees

Bankman-Fried is being investigated by prosecutors in the US over the collapse of FTX, which has cost around one million investors a total of about $10 billion, according to some estimates

In other recent FTX developments:

• Sam Bankman-Fried will testify to Congress remotely because he is 'booked up' and is worried about 'paparazzi' in D.C.
• Shark Tank's Kevin O'Leary revealed he lost $15 MILLION in FTX collapse
• Bankman-Fried 'pursued a massive sponsorship deal with Taylor Swift before the company collapsed.'

Avakian and Sahni are both lawyers at the firm WilmerHale, which is headquartered in Washington D.C.

The appointments come after it was claimed Bankman-Fried's parents, who are both Stanford law professors, have told friends that their son's legal bills could 'wipe them out financially'.

Bankman-Fried was born on the campus of Stanford University in California to two esteemed law professors at the institution.

His father, Joseph Bankman, is Ralph M. Parsons Professor of Law and Business at Stanford Law School.

Bankman-Fried's mother, Barbara Fried, is the William W. and Gertrude H. Saunders Professor of Law, and co-founder of Mind the Gap, a 'secretive Silicon Valley' PAC that supports Democratic candidates.

Prosecutors in the US are investigating whether Bankman-Fried and other FTX insiders should be charged over the firm's collapse.

Bankman-Fried said on Monday that he will not appear in person before a Congress hearing about the scandal on Tuesday because he is 'quite overbooked' — and will instead answer questions via zoom from his luxury home in the Bahamas.

Bankman-Fried will give evidence to congress on Tuesday about the collapse of FTX - but he's expected to appear remotely from his luxury penthouse at the Albany Bahamas Resort (pictured: a luxury property at the Albany)

A view of the exclusive Albany Bahamas Resort community, where FTX is reported to have spent over $100 million on luxury homes. Bankman-Fried remains holed up there amid claims he'd be arrested if he returned to the US, where prosecutors are probing the collapse of FTX

Members of the House Financial Services Committee will quiz him on the collapse of the digital currency exchange that was until recently worth tens of billions of dollars.

The 30-year-old billionaire last week confirmed he would give evidence, but in a Twitter spaces interview said he was worried about the attentions of paparazzi if he traveled to Washington, D.C.

Critics believe he won't travel to the US because he fears arrest. 

The entire FTX operation has been described as being 'run by a gang of kids in the Bahamas'.

Scrutiny over their operation also revealed Ellison once made a viral post on social media about using amphetamines.

'Nothing like regular amphetamine use to make you appreciate how dumb a lot of normal, non-medicated human experience is,' she tweeted on April 5, 2021.

Ellison did not elaborate which amphetamine drug she had taken, only that it helped motivate her to get out of her house and decide what to eat quickly.