Caroline Ellison, former FTX executive, sentenced to 24 months in prison

Caroline Ellison, a former top executive at Sam Bankman-Fried’s crypto exchange FTX, was sentenced to 24 months in prison on Tuesday 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 during his trial on multiple fraud charges last November. In her emotional testimony, she blamed Bankman-Fried for justifying FTX’s illegal behavior and said she was relieved 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. He said he saw no inconsistencies with documents shown to the jury or with things she had previously told prosecutors.

But Kaplan said a prison sentence was warranted because Ellison had participated in what he called the “largest financial fraud ever in this country.” Her cooperation with prosecutors should therefore not serve as a free pass, Kaplan said.

“I’ve seen a lot of cooperators here in 30 years. I’ve never seen one 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 on Nov. 7. Ellison can serve her sentence in a minimum-security facility but will have to forfeit $11 billion, Bloomberg News reported.

Ellison was CEO of Alameda Research, a cryptocurrency hedge fund controlled by Bankman-Fried that was used to handle FTX client funds. In her testimony, she revealed that she altered balance sheets to try to hide the fact that Alameda borrowed approximately $10 billion from FTX clients in June 2022, as the crypto market plummeted and some lenders demanded that Alameda give their money back.

Before FTX collapsed, Bankman-Fried had become a billionaire via cryptocurrencies, earning Fortune Magazine a cover story asking if he was the next Warren Buffett. But after FTX went bankrupt, a jury found that some of FTX investors’ money had been improperly spent on real estate, investments, celebrity endorsements, political contributions, and extravagant lifestyles.

In asking the court for leniency, Ellison’s own lawyers pointed to both her testimony and the trauma of her on-again, off-again relationship with Bankman-Fried. But they also stressed that she was not trying to avoid responsibility for her crimes.

“Caroline blames no one but herself for what she did,” her lawyers wrote in a court filing. “She deeply regrets her role and will carry shame and remorse with her to her grave.”

Bankman-Fried is serving a 25-year prison sentence after he was convicted in March of what a prosecutor once described as one of the largest financial fraud cases in U.S. history.

Life After FTX

Since testifying in the Bankman-Fried trial, Ellison has done extensive charity work, written a novel and worked with her parents on a math textbook for advanced high school students, her lawyers said.

They said she is also now in a healthy romantic relationship and has reconnected with high school friends she lost touch with while working and occasionally dating at Bankman-Fried from 2017 to late 2022.

—With reporting from the Associated Press.

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