Caroline Ellison, who played a crucial role in the conviction of her former boss and ex-boyfriend, the disgraced cryptocurrency magnate Sam Bankman-Fried, was sentenced to two years in prison for fraud and conspiracy on Tuesday.
U.S. District Judge Lewis A. Kaplan imposed a 24-month prison term in New York City and mandated Ellison to forfeit $11 billion due to her connection to the downfall of Bankman-Fried’s crypto exchange, FTX. She faced a potential maximum sentence of around 110 years.
At 29 years old, Ellison accepted a plea deal on charges of conspiracy and financial fraud in December 2022, shortly after FTX declared bankruptcy. She provided nearly three days of testimony against Bankman-Fried during his trial in November.
Bankman-Fried was found guilty of all seven counts of criminal fraud and received a 25-year prison sentence. Prosecutors noted that Ellison’s testimony was fundamental to the case against him.
Her defense team requested that she be sentenced to time served and receive supervised release, highlighting her cooperation with authorities. In a recent court filing, her attorneys noted her quick return to the U.S. from FTX’s Bahamas headquarters in 2022 and her voluntary assistance to the U.S. attorney’s office.
Ellison is reported to have worked closely with financial regulators to clarify the factors that led to the failure at FTX and its sister hedge fund, Alameda Research, which she managed. Federal prosecutors indicated that Alameda Research utilized much of the $8 billion in customer funds improperly taken by Bankman-Fried for various personal and business expenses.
In the bid for a lenient sentence, defense attorney Anjan Sahni argued that Ellison has “recovered her moral compass” and expressed deep regret for her actions and involvement with Bankman-Fried.
During her court statement, Ellison apologized to those impacted and expressed remorse for her participation in the events surrounding FTX’s downfall.
Judge Kaplan characterized the collapse of FTX as potentially the largest financial fraud case in U.S. history and declined to offer a “literal get-out-of-jail-free card” for Ellison, ordering her to report to authorities on or after November 7.
In a 67-page court filing from September 10, FTX CEO John Ray acknowledged that Ellison’s cooperation was “valuable” in assisting his team to protect “hundreds of millions of dollars” in assets during bankruptcy proceedings.
Ellison’s attorneys argued that Bankman-Fried had essentially isolated her, distorting her moral perspective. They asserted that her involvement in “stealing billions” was influenced by her fear of the impending collapse and her complicated relationship with Bankman-Fried, which involved an on-and-off romantic connection.
Before its collapse in 2022, FTX was one of the leading cryptocurrency exchanges globally and was known for its significant lobbying efforts in Washington and its high-profile Super Bowl advertisement.
Bankman-Fried and several senior executives were accused of misappropriating customer funds for speculative investments, luxury real estate purchases in the Caribbean, illegal political contributions, and bribing officials in China.
Ryan Salame, a former executive under Bankman-Fried, was the first to receive a sentence, receiving 7½ years in prison in May, along with more than $6 million in forfeitures and over $5 million in restitution. Two other former executives, Nishad Singh and Gary Wang, are scheduled for sentencing in the upcoming months.