NEW YORK – When his cryptocurrency exchange started teetering in early November, Mr Sam Bankman-Fried went on Twitter to calm everyone down.

FTX was fine, he insisted. Nothing to worry about. Joining him in the outreach was a close colleague: Ms Caroline Ellison, the 28-year-old chief executive of Alameda Research, a crypto trading company that Mr Bankman-Fried also founded.

A little-known figure outside crypto circles, Ms Ellison claimed repeatedly that Mr Bankman-Fried’s empire was on stable financial footing. On Twitter, she sparred with Binance CEO Zhao Changpeng, who was voicing doubts about FTX and Alameda.

But her words were not enough to keep FTX alive. A run on deposits, prompted partly by Mr Zhao’s comments, left the company owing US$8 billion (S$11 billion). Within less than a week, FTX and Alameda had filed for bankruptcy. Now, the companies are facing investigations by the United States Justice Department and the Securities and Exchange Commission, focused on whether FTX’s shortfall arose because it had illegally lent its customers’ deposits to Alameda.

Ms Ellison is at the centre of the furore. In a meeting with Alameda employees the week that the companies imploded, she acknowledged that her company had dipped into FTX user funds. On Twitter, amateur detectives have spent the past two weeks dissecting her life, and she is likely to play a crucial role in any criminal case that emerges from FTX’s collapse.

In some ways, Mr Bankman-Fried, 30, and Ms Ellison could not be more different. While he was an aggressive and outgoing public cheerleader for the crypto industry, she maintained a relatively low profile. But they emerged from the same intellectual milieu. Like Mr Bankman-Fried, Ms Ellison was deeply involved in the effective altruism movement – a community that has become increasingly influential in technology circles. At times, the pair were romantically involved.

Effective altruism is a global philanthropic movement in which donors seek to maximise the effect of their giving for the long term. But the tight-knit community – driven by online forums, blogs and mailing lists – is also a hothouse for all sorts of other ideas outside the mainstream, from polyamorous living to the possibility that artificial intelligence will one day destroy humankind.

The daughter of economists at the Massachusetts Institute of Technology, Ms Ellison grew up in the Boston area, where she was the captain of the Newton North High School mathematics team and regarded as a serious student and a hard worker.

In 2012, Ms Ellison moved across the country to attend college at Stanford University, where she majored in maths. Former classmates described her as studious and quiet.

Ms Ellison has given a handful of interviews over the years, speaking in soft, halting tones. By her own account, she became interested in effective altruism in her freshman year at Stanford, after reading about the movement online. When she graduated, she joined quantitative trading firm Jane Street, where she was part of a cohort of new arrivals coached by Mr Bankman-Fried, who was a couple of years older.

“I was kind of scared of him,” she said in an interview with The New York Times in March. “You could tell he was quite smart and sort of intimidating.”

The pair stayed in touch, and Ms Ellison got in contact with Mr Bankman-Fried in February 2018, not long after he had started Alameda. They had coffee, and Mr Bankman-Fried seemed cagey, informing her that he had just embarked on a new project he could not tell her about. But eventually, he decided to share his plans for Alameda.

“I was like, ‘Oh, man, this sounds pretty exciting’,” she recalled in March. “For the next week, I kept thinking about it and being like, ‘I wonder what is going on at Alameda right now?’ It sounded like crypto trading is pretty crazy.”

Alameda made fast profits by exploiting inefficiencies in the Bitcoin market. Not long after its founding, Mr Bankman-Fried moved the company to Hong Kong, where Ms Ellison eventually joined him with a small group of traders. In 2019, he started FTX; as the new exchange started to consume more of his time, he appointed Ms Ellison and another trader, Mr Sam Trabucco, as joint CEOs of Alameda. Mr Trabucco stepped down earlier in 2022, leaving Ms Ellison in sole charge.

The relationship between Alameda and FTX was the original sin that led to the implosion of Mr Bankman-Fried’s empire. Alameda traded heavily on the FTX platform, meaning it sometimes benefited when FTX’s other customers lost money.

Even as she profited from crypto’s explosion in popularity, Ms Ellison was hardly a true believer in the technology.

“I do think a lot of crypto projects don’t have much real value,” she said matter-of-factly on FTX’s official podcast in early 2021. On another episode, she said she had pursued crypto trading mainly to make lots of money, which she planned to give away as part of her commitment to effective altruism.

In 2021, FTX relocated to the Bahamas, and Ms Ellison set about encouraging other people in the effective altruism community to follow.

In the Bahamas, Ms Ellison lived in the five-bedroom penthouse of Albany, a luxury resort on the island of New Providence. She shared the space with nine other occupants, including Mr Bankman-Fried.

Even before the crisis of the past two weeks, there were signs that Alameda was in big trouble. According to a recent bankruptcy filing, the company’s quarterly financial statements were never audited. One business partner, who requested anonymity to describe private business discussions, ended work with Alameda after a call with its executives raised red flags late in 2021.

The business partner asked about a line representing US$2 billion of investments on Alameda’s balance sheet – a sizeable chunk of the company’s overall assets – and the Alameda representatives could not explain what it was.

Then, on Nov 2, crypto news site CoinDesk published an article based on a leaked Alameda balance sheet that appeared to show that a large portion of the company’s assets consisted of FTT, the cryptocurrency that FTX invented.

The disclosure raised concerns about the financial stability of Mr Bankman-Fried’s empire. On Nov 6, Mr Zhao announced plans to sell an enormous supply of FTT. At the time, the token was worth about US$22; if its price dropped too much, FTX would be in trouble.

Ms Ellison confronted Mr Zhao on Twitter: “Alameda will happily buy it all from you today at US$22,” she said. Behind the scenes, she gave orders to her small team of traders to keep the token’s price at US$22 by placing bids at roughly that level, according to a person familiar with the matter.

But Mr Zhao’s tweets set off the crypto equivalent of a bank run, and customers rushed to withdraw their holdings from FTX.

Two days after Mr Zhao’s tweets, Mr Bankman-Fried announced what had seemed unthinkable: The exchange was facing “liquidity crunches”, unable to meet withdrawals.

In a meeting with employees the next day, Ms Ellison admitted that Alameda had taken customer funds from FTX to make up for shortfalls in its accounts, according to a person familiar with the matter. Ms Ellison sounded tearful, the person said, and told the group that she was sorry. FTX now owes creditors US$8 billion, and the amount it lent to Alameda is as high as US$10 billion, according to people familiar with the company’s finances.

The Alameda employees were shocked. As the news sank in, they commiserated, discussing plans to leave Hong Kong and seek legal help. Ms Ellison was not included. NYTIMES