Caroline Ellison, a former top executive at Sam Bankman-Fried’s FTX cryptocurrency exchange, was sentenced Tuesday to 24 months for her role in a multibillion-dollar fraud involving the bankrupt company.
Ellison, 29, pleaded guilty nearly two years ago and testified against Bankman-Fried for nearly three days at his trial on multiple fraud charges last November. In her emotional testimony, she blamed Bankman-Fried for justifying FTX’s illegal conduct and said she had felt relief when the company collapsed because she “didn’t have to lie anymore.”
U.S. District Judge Lewis A. Kaplan said Ellison’s cooperation in the case was “very, very substantial” and praised her testimony, saying he saw no inconsistencies with documents shown to the jury or things she had previously told prosecutors.
But Kaplan said a prison sentence was warranted because Ellison had participated in what he said might be the “greatest financial fraud ever perpetrated in this country.” As a result, her cooperation with prosecutors should not serve as a get-out-of-jail-free card, Kaplan said.
“I’ve seen a lot of cooperators in 30 years here. I’ve never seen one quite like Ms. Ellison,” the judge said.
“Vulnerable” Ellison
In handing down his sentence, Kaplan also described Ellison as “vulnerable” and “exploited,” according to Bloomberg News.
She was ordered to report to prison Nov. 7. Ellison can serve the sentence at a minimum-security facility, and she’ll have to forfeit $11 billion, Bloomberg News reported.
Ellison was chief executive at Alameda Research, a cryptocurrency hedge fund controlled by Bankman-Fried that was used to process FTX customer funds. In her testimony, she disclosed that she altered balance sheets to try to hide that Alameda was borrowing about $10 billion from FTX customers in June 2022, when the crypto market was plummeting and some lenders were demanding that Alameda return their money.
Stephanie Keith/Bloomberg via Getty Images
Prior to FTX’s collapse, Bankman-Fried had became a billionaire through cryptocurrencies, earning a Fortune magazine cover that asked if he was the next Warren Buffett. But after FTX collapsed into bankruptcy, a jury concluded that some of FTX investors’ money had been improperly spent on real estate, investments, celebrity endorsements, political contributions and lavish lifestyles.
In asking the court leniency, Ellison’s own lawyers cited both her testimony and the trauma of her off-and-on romantic relationship with Bankman-Fried, though they also stressed that she wasn’t trying to evade responsibility for her crimes.
“Caroline blames no one but herself for what she did,” her lawyers wrote in a court filing. “She regrets her role deeply and will carry shame and remorse to her grave.”
Bankman-Fried is serving a 25-year sentence after he was sentenced in March in what a prosecutor once described as one of the largest financial frauds in U.S. history.
Life after FTX
Since testifying at Bankman-Fried’s trial, Ellison has engaged in extensive charity work, written a novel and worked with her parents on a math enrichment textbook for advanced high school students, according to her lawyers.
They said she also now has a healthy romantic relationship and has reconnected with high school friends she had lost touch with while she worked for and sometimes dated Bankman-Fried from 2017 until late 2022.
—With reporting by the Associated Press.
