A federal judge has sentenced Caroline Ellison, the former girlfriend of FTX co-founder Sam Bankman-Fried, to two years in prison, highlighting her extensive cooperation with prosecutors that contributed to Bankman-Fried’s conviction for one of the largest financial fraud cases in U.S. history. Judge Lewis Kaplan commended Ellison’s “very, very substantial cooperation” during the proceedings.
During her sentencing, Ellison expressed deep regret, stating, “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.” She acknowledged her shame in what had transpired, while her family supported her in the courtroom.
FTX, the now-defunct cryptocurrency platform, was a high-profile venture that collapsed in November 2022 amid concerns over its relationship with Alameda Research, a hedge fund also founded by Bankman-Fried. Following the collapse, Ellison, who was the CEO of Alameda, pleaded guilty to multiple counts of fraud and conspiracy. She turned against Bankman-Fried, alleging that he orchestrated a scheme that defrauded investors and misappropriated $8 billion from customer funds.
Bankman-Fried, who denied the charges against him, was sentenced to 25 years in prison after being found guilty. He filed an appeal last week.
Ellison played a pivotal role in the trial against Bankman-Fried, providing key testimony that highlighted his leadership in the fraudulent enterprise. Prosecutors noted her frankness and significant assistance in their investigation, which influenced her sentencing despite the serious charges she faced.
During her testimony, Ellison consistently indicated that Bankman-Fried was responsible for directing various actions, asserting that “the buck stopped with him.” Some critics have pointed out that while she was a compelling witness, she was not a whistleblower, suggesting that she had opportunities to halt the fraud before it escalated.
Following the collapse of FTX, many customers found themselves unable to access their accounts. However, in a surprising development, the estate overseeing FTX’s bankruptcy reported recovering enough assets to repay most creditors fully, aided by a rise in the value of its crypto assets.
Although legal experts had anticipated that Ellison might avoid prison time, given her cooperation and generally law-abiding history, Judge Kaplan emphasized that the severity of the fraud warranted a prison sentence. Other cases involving former FTX executives are ongoing, with some awaiting sentencing in connection with the larger scandal.