A federal judge has sentenced Caroline Ellison, the former girlfriend of FTX co-founder Sam Bankman-Fried, to two years in prison. This sentence comes as a result of her significant cooperation with prosecutors, which contributed to Bankman-Fried’s conviction in a massive financial fraud case.
Judge Lewis Kaplan highlighted Ellison’s “very, very substantial cooperation” during the proceedings. In her remarks to the court, Ellison expressed remorse, stating, “I think on some level my brain can’t even truly comprehend the scale of the harm it caused… I am so, so sorry,” while visibly emotional. Her family members were present for the sentencing.
To summarize the situation: FTX, a high-profile cryptocurrency platform, collapsed in November 2022 when a surge of customer withdrawals raised concerns about the company’s connections to Bankman-Fried’s hedge fund, Alameda Research. Ellison, who managed Alameda, pleaded guilty to seven counts of fraud and conspiracy right after FTX’s downfall, becoming a key witness against Bankman-Fried, who faced charges of defrauding investors and diverting $8 billion in customer funds.
While Bankman-Fried pleaded not guilty and was sentenced to 25 years in prison last week, Ellison’s testimony at his trial was vital. Prosecutors noted her honesty and assistance, which influenced her sentencing despite the gravity of her own charges.
In court, Judge Kaplan acknowledged that although Ellison bore responsibility for the fraud, her remarkable cooperation set her apart from Bankman-Fried. Throughout her testimony, Ellison, 29, consistently claimed that Bankman-Fried was the ultimate authority behind their actions, stating “Sam did” when asked who prompted various decisions.
Critics have pointed out that despite her cooperation, Ellison was not a whistleblower, arguing that she had the power to prevent the scheme much earlier. Despite the catastrophic consequences of the fraud, FTX’s bankruptcy overseers have reported recovering enough assets to repay most creditors, owing to a rise in crypto asset values.
Legal experts had anticipated that Ellison might avoid prison time due to the typical leniency shown to white-collar cooperators. However, Judge Kaplan emphasized that the severe nature of the case warranted a prison sentence.
Other cases involving former FTX executives are ongoing. Ryan Salame, a former executive, received a sentence of over seven years for campaign finance violations and operating an unlicensed money transmission business. Two additional executives, Nishad Singh and Gary Wang, who also cooperated with prosecutors, are set for sentencing in the coming months.