Caroline Ellison Sentenced to 2 Years for Role in FTX Fraud

Due to her role in the demise of FTX, Caroline Ellison, the former CEO of Alameda Research, was given a two-year prison sentence. Ellison was also ordered to forfeit almost $11 billion by a federal judge who imposed the penalty. Ellison will serve three years of supervised release after finishing her prison sentence. Ellison was sentenced following her significant contribution as a witness in the government’s trial of Sam Bankman-Fried, the founder of FTX and her ex-boyfriend.

Despite her cooperation, Judge Lewis A. Kaplan, who delivered the sentence, acknowledged the complexity of Ellison’s involvement. He stated, “You were vulnerable and you were exploited,” reflecting sympathy toward her situation. However, he emphasized that FTX’s collapse represented one of the largest financial frauds in U.S. history, and Ellison’s cooperation did not fully absolve her. Judge Kaplan added, “In a case this serious, to be literally a ‘get out of jail free’ card is not something I can see my way through to.”

Ellison’s testimony played a pivotal role in securing Bankman-Fried’s conviction. Prosecutors described her cooperation as “extraordinary,” with Assistant U.S. Attorney Danielle Sassoon highlighting her role as a cornerstone of the case. Unlike Bankman-Fried, who showed no remorse, Ellison’s proactive efforts to assist the Department of Justice earned her some leniency.

Contrasting Sentences and Future Implications

Bankman-Fried, who was convicted of fraud and conspiracy on all counts, was sentenced to 25 years in prison. His lawyers are currently appealing the conviction. In stark contrast, Ellison’s willingness to cooperate with investigators was seen as a mitigating factor in her lighter sentence. Her legal team argued that she was influenced by her relationship with Bankman-Fried and sought his approval, which led to her involvement in the scheme.

Before the sentencing, Ellison addressed the court, apologizing to the victims of FTX and Alameda. “The human brain is bad at comprehending big numbers. I can’t even begin to imagine the pain I’ve caused,” she said, expressing deep regret for her actions. She added, “If you had told me back in 2018 that I would end up pleading guilty to fraud, I would have told you you were crazy. At each stage of the process it became harder and harder to extricate myself…I’m sorry I wasn’t brave.”

Ellison has 45 days before she must surrender herself to begin her sentence, which she will serve in a minimum-security facility near Boston.