A federal judge has sentenced Caroline Ellison, the former girlfriend of FTX co-founder Sam Bankman-Fried, to two years in prison, acknowledging her significant cooperation with prosecutors during the trial that led to Bankman-Fried’s conviction for one of the largest financial frauds in U.S. history. Judge Lewis Kaplan emphasized Ellison’s “very, very substantial cooperation” in the case.
In her statement to the court, Ellison expressed remorse, saying, “I think on some level my brain can’t even truly comprehend the scale of the harm it caused. That doesn’t mean I don’t try. I am so so sorry,” as her family supported her from the audience.
FTX emerged as a popular startup for buying and selling digital assets, but it collapsed in November 2022 after customers withdrew their funds en masse amidst concerns over its connections to Alameda Research, a crypto hedge fund co-founded by Bankman-Fried and Ellison. Following the collapse, Ellison pleaded guilty to multiple counts of fraud and conspiracy and became a key witness against Bankman-Fried, accusing him of orchestrating a scheme that defrauded investors and misappropriated $8 billion from customers.
Bankman-Fried was convicted last year on several counts and sentenced to 25 years in prison after maintaining his innocence. His appeal was filed last week.
Ellison’s testimony was instrumental during the trial. Prosecutors highlighted her candor and assistance in their investigation in a memo submitted to the judge, which helped mitigate her sentence despite the serious nature of her charges. Judge Kaplan acknowledged her role in the fraud but differentiated her conduct based on her cooperation.
Over the three days she spent testifying, Ellison consistently pointed to Bankman-Fried as the decision-maker in their fraudulent activities, stating, “Sam did” whenever asked about who directed her actions.
Critics, including Bankman-Fried’s defense team, contended that while Ellison was a compelling witness, she was not a whistleblower and could have intervened to halt the fraud earlier. Legal experts had previously suggested it was unlikely she would receive prison time, as many white-collar cooperators typically escape incarceration, especially if they have otherwise maintained law-abiding lives.
However, Judge Kaplan determined that the severity of the fraud necessitated a prison sentence. Other former FTX executives are still awaiting sentencing, with one having already received over seven years for related charges, and two others set to be sentenced in the coming months.