A federal judge has sentenced Caroline Ellison, the former girlfriend of FTX co-founder Sam Bankman-Fried, to two years in prison for her role in one of the largest financial frauds in U.S. history. The sentence was handed down by Judge Lewis Kaplan, who acknowledged Ellison’s extensive cooperation with prosecutors that contributed to Bankman-Fried’s conviction.
During the sentencing, Ellison expressed remorse for her actions, stating, “I am deeply ashamed of what we had done,” while her family supported her from the courtroom.
FTX, a high-profile cryptocurrency exchange, collapsed in November 2022, following a rush of customer withdrawals fueled by concerns over the close relationship between FTX and Bankman-Fried’s hedge fund, Alameda Research, which Ellison managed. After the collapse, Ellison pleaded guilty to seven counts of fraud and conspiracy, becoming one of several insiders to testify against Bankman-Fried, who is accused of defrauding investors and misappropriating billions in customer funds.
Bankman-Fried was sentenced to 25 years in prison after being found guilty of multiple fraud and conspiracy charges. He has filed an appeal against his conviction.
Ellison’s testimony was pivotal in Bankman-Fried’s trial, where she admitted her involvement in the fraudulent activities, consistently stating that Bankman-Fried was the driving force behind their decisions. Although she garnered praise for her cooperation, critics argue that she had the opportunity to prevent significant losses earlier in the scheme.
At the time of FTX’s downfall, customers were unable to access their funds, but recent reports from the FTX estate said they had managed to recover sufficient assets to repay most creditors fully, thanks to rising cryptocurrency prices.
Legal experts had previously suggested that prison time for Ellison was unlikely, particularly given the typical leniency shown to cooperators in white-collar cases. However, Judge Kaplan remarked that the severity of the fraud necessitated a term of imprisonment.
In related developments, Ryan Salame, another former FTX executive, has been sentenced to over seven years in prison for campaign finance violations and operating an unlicensed money transmission business. Sentences for other executives involved in the case are pending.