Caroline Ellison, former FTX director, sentenced to 24 months in prison

Caroline Ellison, the former chief executive of Sam Bankman-Fried’s cryptocurrency exchange FTX, was sentenced Tuesday to 24 months in prison for her role in a multibillion-dollar fraud involving the collapsed company.

Ellison, 29, pleaded guilty almost two years ago and testified against Bankman-Fried spent nearly three days at his trial for multiple frauds last November. In her emotional testimony, she blamed Bankman-Fried for justifying FTX’s illegal conduct and said she was relieved when the company went under because she “didn’t have to lie anymore.”

District Judge Lewis A. Kaplan said Ellison’s cooperation in the case was “very, very significant” and praised her testimony, saying he saw no inconsistencies in the documents presented to the jury or in what she had previously told prosecutors.

But Kaplan said the prison sentence was justified because Ellison participated in what he said may have been “the largest financial fraud ever committed in this country.” As a result, her cooperation with prosecutors should not serve as a get-out-of-jail-free card, Kaplan said.

“I’ve seen a lot of associates over 30 years. I’ve never seen anyone like Ms. Ellison,” the judge said.

“Helpless” Ellison

According to Bloomberg News, while handing down the sentence, Kaplan described Ellison as “helpless” and “exploited.”

She was ordered to report to prison on November 7. Ellison could serve her sentence in a low-security facility but will be required to repay $11 billion, Bloomberg News reported.

Ellison was the CEO of Alameda Research, a cryptocurrency hedge fund controlled by Bankman-Fried that was used to process FTX client funds. In her testimony, she revealed that she altered balance sheets to try to hide the fact that Alameda had borrowed about $10 billion from FTX clients in June 2022, when the cryptocurrency market was plummeting and some lenders were demanding that Alameda return its money.

Before FTX collapsed, Bankman-Fried became a billionaire with cryptocurrencies, earning him a Fortune magazine cover asking if he was the next Warren Buffett. But after FTX filed for bankruptcy, a jury found that some of FTX investors’ money had been misused on real estate, investments, celebrity endorsements, political contributions, and a lavish lifestyle.

In asking the court for a lenient sentence, Ellison’s lawyers cited both her testimony and the trauma of her erratic relationship with Bankman-Fried, but also stressed that she did not attempt to avoid responsibility for her crimes.

“Caroline does not blame anyone but herself for what she did,” her lawyers wrote in court papers. “She deeply regrets her role and will carry the shame and remorse with her to her grave.”

Bankman-Fried is serving a 25-year sentence after his conviction in March for a crime that prosecutors described as one of the largest financial frauds in U.S. history.

Life after FTX

Since testifying in the Bankman-Fried trial, Ellison has done extensive charity work, written a novel and worked with her parents on a math textbook for high school students, her lawyers say.

They said she now has a healthy romantic relationship and has reconnected with high school friends she lost touch with while she was working for Bankman-Fried, and occasionally dated that person from 2017 until late 2022.

—Based on reports from the Associated Press.

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