Don't Just Blame Caroline Ellison for Alameda's Collapse

The collapse of Sam Bankman-Fried's cryptocurrency empire has left many questions in its wake. But some are too quick to lay the blame solely on Caroline Ellison, the young CEO of Alameda Research.

There's no doubt Ellison was unqualified for the leadership role she was given. Her own diary entries acknowledge she didn't feel well-suited to run Alameda. But assigning full responsibility to her ignores the dysfunctional environment she operated in.

Ellison was hand-picked for the CEO position by SBF himself. He promoted his inner circle to leadership roles throughout FTX and Alameda, prioritizing loyalty over credentials. Still in her twenties, Ellison was suddenly thrust into a powerful position beyond her experience.

SBF's poor judgment doesn't absolve Ellison of guilt. But the root of Alameda's problems extend far beyond just her incompetence. Alameda operated with virtually no risk management or oversight. Its access to FTX customer funds was a glaring conflict of interest. This reckless structure was likely engineered by SBF, not Ellison.

In the end, Alameda was doomed by the concentration of power in SBF's inner circle. With no accountability, questionable decisions went unchecked. Ellison failed spectacularly in her duties, but she did so in an environment set up for abuse.

Rather than just punish Ellison as a convenient scapegoat, we should examine how SBF's cultish promotion of friends to key roles led to disaster. If given power beyond their means, many young executives would make poor decisions. Ellison's rise and fall should serve as a warning about the dangers of unchecked power and inadequate oversight in the corporate world.

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