Caroline Ellison, who played a crucial role in the conviction of her former boss and ex-boyfriend, Sam Bankman-Fried, was sentenced to two years in prison for fraud and conspiracy. The sentencing took place on Tuesday in U.S. District Court in Manhattan, where Judge Lewis A. Kaplan imposed a 24-month prison term and mandated Ellison to forfeit $11 billion related to her participation in the collapse of the cryptocurrency exchange FTX.
Ellison, 29, agreed to a plea deal on conspiracy and financial fraud charges in December 2022, following the bankruptcy of FTX the previous month. Her testimony against Bankman-Fried spanned nearly three days during his trial last November, which culminated in his conviction on seven criminal fraud charges and a 25-year prison sentence.
Prosecutors hailed Ellison’s testimony as fundamental to the trial’s outcome. Her legal team had requested that she receive a sentence of time served and supervised release due to her cooperation with authorities. They highlighted her prompt return to the U.S. from FTX’s Bahamian headquarters and her voluntary collaboration with U.S. regulators in uncovering the operational failures at FTX and Alameda Research, the hedge fund she led.
Ellison’s attorneys pointed to her previously clean record and character references that attested to her integrity. They also argued against financial penalties, emphasizing her cooperation with authorities as a mitigating factor.
In a court submission by FTX CEO John Ray, who is managing the company’s bankruptcy process, he acknowledged the significant value of Ellison’s cooperation in safeguarding hundreds of millions of dollars in assets.
Further, Ellison’s lawyers claimed that Bankman-Fried had manipulated her into a state of isolation, leading to a distortion of her moral judgment. They argued that under his influence, she facilitated the misappropriation of billions while living in fear of an impending collapse, complicated by their tumultuous romantic relationship.
Prior to its downfall in 2022, FTX was a prominent cryptocurrency exchange renowned for its lobbying efforts in Washington and a widely recognized Super Bowl advertisement. Bankman-Fried and other top officials were accused of misusing customer funds for high-risk investments, purchasing luxury real estate, making illegal political contributions, and bribing officials in China.
Ryan Salame, a former key associate of Bankman-Fried, was the first of the FTX executives to be sentenced, receiving a seven-and-a-half-year prison term in May along with orders to forfeit over $6 million and pay more than $5 million in restitution. Other former executives Nishad Singh and Gary Wang are scheduled for sentencing in the upcoming months.