Key witness in FTX founder Sam Bankman-Fried’s trial refuses jail time at upcoming sentencing

NEW YORK — Caroline Ellison, the former chief executive of the collapsed cryptocurrency empire of FTX founder Sam Bankman-Fried and his ex-girlfriend, will not seek a prison sentence at her sentencing later this month.

Ellison’s attorneys filed the motion just before midnight Tuesday in Manhattan federal court, ahead of his scheduled sentencing on Sept. 24.

The lawyers cited her immediate and extensive cooperation with U.S. authorities when FTX and its affiliated companies collapsed in November 2022, and noted that the Department of Criminal Justice recommended that she not serve any prison time.

Ellison, 29, pleaded guilty to the charges nearly two years ago and testified against Bankman-Fried for nearly three days at his trial last November. After his conviction, Bankman-Fried was sentenced to 25 years in prison. Without her cooperation, Ellison could have faced decades in prison.

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

In pretrial speeches, attorneys detailed Ellison and Bankman-Fried’s on-and-off romantic relationship, which spanned several years.

They said that relationship, and her appointment as CEO of Alameda Research, a hedge fund linked to FTX, contributed to her committing the offences at Bankman-Fried’s direction.

She testified in court that she disclosed the large-scale fraud to employees even before FTX filed for bankruptcy in November 2022.

She explained to them that funds from FTX investors had been misused to cover billions of dollars that Bankman-Fried had lost on investments or squandered on charitable donations, political contributions and purchases that allowed him to maintain a lavish lifestyle.

In early December 2022, she fully cooperated with federal prosecutors, the lawyers wrote, disclosing information about Bankman-Fried’s actions that directly led to some of the charges brought against him in subsequent weeks.

“Over time, Caroline’s moral compass became warped,” the lawyers said. “At Mr Bankman-Fried’s behest, she took actions she knew were wrong, helping him steal billions. She lived in fear, knowing a catastrophic fall was likely but fearing that extricating herself from it would only hasten that fall.

“When FTX finally went under, Caroline felt deep sadness for all the people they had betrayed, but also immense relief because she no longer had to lie and steal for Mr Bankman-Fried,” they added.

Since giving her testimony in the Bankman-Fried trial, Ellison has continued to suffer, even as she engages in extensive charity work, wrote a novel and worked with her parents on a math textbook for high school students, her lawyers say.

“She has been effectively disqualified from employment in the near future due to the publicity this matter has generated, and the reputational damage is unlikely to abate any time soon,” they said. “Caroline was not motivated by greed and did not take steps to personally profit at the expense of clients.”

According to court documents, she now has a healthy romantic relationship and has reconnected with high school friends she lost touch with after working at Bankman-Fried from 2017 until November 2022.

In addition, her attorneys say she is in the process of finalizing agreements with the government and FTX debtors, as well as a comprehensive settlement in the multidistrict FTX litigation that she expects will result in her being stripped of everything she earned while employed in Alameda.

Prosecutors were expected to file their opening arguments before the verdict was announced.