STORY: A key witness in the FTX fraud trial arrived at a New York City court on Tuesday to testify against founder Sam Bankman-Fried. Caroline Ellison was the chief executive officer of Bankman-Fried's hedge fund Alameda Research.

And at one point, his girlfriend.

Ellison testified on Tuesday that the former crypto mogul directed her and others to defraud customers of his FTX exchange by taking their money without their knowledge.

She portrayed Bankman-Fried as a “very ambitious” person, who had no qualms sharing misleading financial information with lenders.

She also said he became preoccupied with a rivalry with another crypto exchange, Binance, and thought he had a chance of one day becoming president of the United States.

During nearly three hours of testimony, Ellison said the hedge fund she ran, Alameda Research, had systems set up for using FTX customer money.

And she testified that Alameda took some $10 billion in FTX customer funds to repay debts and make investments.

Ellison said her former boss was:

"...the one who set up these systems that allowed Alameda to take the money and he was the one who directed us to take customer money to repay our loans."

The 28-year-old's court appearance has been keenly awaited.

She is one of three ex-members of Bankman-Fried's inner circle who have pleaded guilty to fraud charges on a cooperation deal with the Manhattan U.S. Attorney's office.

Prosecutors say the FTX founder plundered billions in customer funds to prop up Alameda, buy real estate and donate more than $100 million to U.S. political campaigns.

That’s before FTX declared bankruptcy in November 2022, following a collapse that shocked financial markets.

Bankman-Fried, whose parents also showed up at the trial, has pleaded not guilty to seven fraud and conspiracy charges.

He has argued that while he made mistakes running FTX, he never intended to steal funds.

Ellison is expected to return to the witness stand on Wednesday.