Caroline Ellison, a former cryptocurrency executive, was sentenced to two years in prison on Tuesday for her involvement in the $8 billion theft of customer funds from the bankrupt FTX exchange, which was founded by her ex-boyfriend, Sam Bankman-Fried. Despite the judge acknowledging her extensive cooperation with prosecutors, US District Judge Lewis Kaplan expressed discomfort with the idea that remorse and cooperation could serve as a 'get out of jail free card' in such a serious case. Prosecutors have labeled Bankman-Fried's actions as one of the largest financial frauds in US history.
Ellison, 29, pleaded guilty to seven felony counts of fraud and conspiracy and testified as a prosecution witness during Bankman-Fried's trial. He was convicted of fraud and other charges last year and is currently serving a 25-year prison sentence due to FTX's collapse in 2022. The crimes Ellison admitted to carried a maximum sentence of 110 years in prison. Her lawyers argued for no prison time due to her cooperation, while prosecutors also sought leniency.
Judge Kaplan stated that Ellison was 'gravely culpable in this fraud,' but her 'remarkable cooperation' set her apart from Bankman-Fried. He expressed confidence that she would not repeat such actions, but emphasized the severity of the fraud, which he described as one of the greatest in the country's history. Ellison appeared visibly affected by the sentence, and during her address to the court, she expressed deep regret for the harm she caused.
Ellison, who ran Alameda Research, a cryptocurrency-focused hedge fund founded by Bankman-Fried, admitted to considering leaving the company multiple times. She attributed her failure to act to the influence of Bankman-Fried's voice in her head. The US Attorney's office in Manhattan, which brought the charges, urged Kaplan to be lenient with Ellison, highlighting the importance of her testimony in convicting Bankman-Fried.
Prosecutors noted that Ellison met with them approximately 20 times to assist in understanding FTX's collapse and building the case against Bankman-Fried. They emphasized that unlike Bankman-Fried, Ellison was not cunning and was not driven by greed. Ellison's lawyer argued that her cooperation should be recognized as a powerful message about the value of honesty in financial crime cases.
Judge Kaplan recommended that Ellison serve her sentence in a minimum-security prison, with her term beginning in November. She may be eligible for release earlier if she demonstrates good behavior. Two other former FTX executives who cooperated with prosecutors, Nishad Singh and Gary Wang, are scheduled to be sentenced in late October and November. Bankman-Fried, who amassed a net worth of $26 billion during the cryptocurrency boom, saw his wealth vanish with FTX's collapse. He is currently appealing his conviction and sentence.
