Caroline Ellison, the former CEO of Alameda Research, received a two-year prison sentence today from District Judge Lewis A. Kaplan for her role in the collapse of the cryptocurrency exchange FTX, a key event in one of the largest financial scandals in U.S. history.
Ellison had pleaded guilty to fraud charges and collaborated extensively with federal authorities during the investigation against FTX founder Sam Bankman-Fried, who was sentenced to 25 years in prison. In a recent court filing, her attorneys sought a sentence of time served, citing her significant cooperation throughout the investigation.
Judge Kaplan commended Ellison’s cooperation, stating, “I’ve seen a lot of cooperators in 30 years. I’ve never seen one quite like Ms. Ellison.” He also ordered her to forfeit approximately $11 billion.
Her defense team argued that Ellison’s assistance was instrumental in securing Bankman-Fried’s conviction and in recovering assets lost by FTX customers. They asserted that she poses no threat to public safety and should not face additional prison time. Anjan Sahni, one of Ellison’s attorneys, remarked, “Caroline should have left…she could not bring herself to leave Bankman-Fried’s orbit…Her first instincts weren’t to protect herself, but to try to make things right.”
Ellison played a crucial role in exposing the FTX scandal, which involved billions in misappropriated customer funds. In her statements, she expressed relief at being able to speak openly with prosecutors since the collapse of FTX.
Despite her cooperation, Judge Kaplan still placed significant blame on Ellison, reflecting the seriousness of her actions. The FTX platform collapsed in November 2022 amid allegations of fraud and mismanagement, affecting numerous investors and customers.
Ellison’s case has garnered significant attention from legal experts and the crypto community. Speculation on platforms like Polymarket had circulated about whether she might avoid prison time altogether.
Background on Caroline Ellison
As co-CEO of Alameda Research, Ellison engaged in questionable financial practices, including the alleged misuse of FTX customer funds to cover Alameda’s liabilities. She confessed to participating in schemes that misappropriated billions in customer funds for risky investments and personal loans to FTX executives.
In a July report by the New York Times, it was revealed that Ellison recorded her misgivings about her leadership abilities in private Google documents, reflecting her concerns about running a major division of Bankman-Fried’s enterprise. Notably, she also had a personal relationship with Bankman-Fried.
Ellison’s cooperation with prosecutors was crucial during the trials, as her testimony detailed the misappropriation of funds and deceptive practices at FTX. Assistant U.S. Attorney Danielle Sassoon emphasized the significance of Ellison’s testimony, stating, “I cannot overstate the importance of Ellison’s testimony in convicting Bankman-Fried…Her cooperation proved his criminal knowledge and intent.”
Other Sentences in the FTX Case
Earlier this year, Ryan Salame, another former FTX executive, was sentenced to 7.5 years for his involvement in an unlawful political influence campaign and operating an unlicensed money-transmitting business. Despite his legal team’s requests for leniency, prosecutors highlighted his actions as detrimental to public trust in both elections and financial integrity.
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