Caroline Ellison Sentenced to Two Years in Prison for Role in FTX Collapse
Caroline Ellison, former CEO of Alameda Research, has been sentenced to two years in prison by District Judge Lewis A. Kaplan. Her involvement in the collapse of the cryptocurrency exchange FTX and its affiliated hedge fund, Alameda Research, has been central to one of the largest financial scandals in U.S. history.
Ellison pleaded guilty to fraud charges and cooperated with federal authorities in the case against FTX founder Sam Bankman-Fried, who was sentenced to 25 years in prison. In a court filing earlier this month, Ellisonβs attorneys requested a sentence of time served and supervised release, highlighting her extensive cooperation with the investigation.
βIβve seen a lot of cooperators in 30 years. Iβve never seen one quite like Ms. Ellison,β Judge Kaplan said in court on Sept. 24.
Judge Kaplan also concluded that Ellison has to forfeit about $11 billion. Ellisonβs attorneys argued that her assistance was crucial in securing Bankman-Friedβs conviction and recovering assets lost by FTX customers. The legal team emphasized that she poses no risk to public safety and should not serve additional prison time.
βCaroline should have left,β Ellisonβs lawyer, Anjan Sahni, said in court. βShe could not bring herself to leave Bankman-Friedβs orbitβ¦Carolineβs first instincts werenβt to protect herself, but to try to make things right.β
Ellisonβs cooperation was key in unraveling the FTX scandal, which involved billions of dollars in misappropriated customer funds.
βSince the collapse of FTX, itβs been a relief to be completely honest and open with prosecutors and investigators,β Ellison said in court on Sept. 24.
Despite this cooperation, Judge Kaplan still placed significant blame on Ellison, as reflected in his ruling. FTX collapsed in November 2022, with accusations of fraud and mismanagement aimed at both the exchange and Alameda Research.
Ellisonβs fate has drawn attention from both legal experts and the broader crypto community. On platforms like Polymarket, traders speculated whether she would avoid prison time.
Who is Caroline Ellison?
Caroline Ellison played a significant role in the collapse of FTX and its affiliated entities. As co-CEO of Alameda, she engaged in questionable financial practices, including the alleged misuse of FTX customer funds to cover Alamedaβs liabilities. Ellison admitted to participating in a scheme to misuse billions of dollars in FTX customer funds to cover Alameda Researchβs losses, finance risky investments, and make personal loans to FTX executives.
In July, it was reported that Ellison recorded her thoughts on private documents, where she expressed doubts over her suitability to run the fund, a key division of Bankman-Friedβs business. Ellison also dated Bankman-Fried for a time.
βShe didnβt shy away from the details, however embarrassing they were,β a lawyer said about Ellisonβs details of her relationship with Bankman-Fried.
As previously mentioned, Ellison cooperated with prosecutors throughout the trials, testifying against Bankman-Fried to avoid a potential 110-year prison sentence. Her testimony, detailing the misappropriation of funds and deceptive practices at FTX, was pivotal in the trial.
βI cannot overstate the importance of Ellisonβs testimony in convicting Bankman-Fried,β Assistant US Attorney Danielle Sassoon said in the Sept. 24 courtroom, βEllisonβs cooperation, which together with the trial evidence, proved Bankman-Friedβs criminal knowledge and intent.β
Other FTX Sentences
Earlier this year, a former FTX executive, Ryan Salame, was sentenced to 7.5 years in prison for his role in an unlawful political influence campaign and operating an unlicensed money-transmitting business. Despite his legal teamβs request for a lighter sentence, prosecutors emphasized his involvement in undermining public trust in elections and financial integrity.
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