A Manhattan federal judge on Tuesday handed down a two - class prison house sentence to Caroline Ellison , who assisted one of the large financial crimes in U.S. history while overseeing a trading firm connected to the FTX cryptocurrency exchange but then served as a fundamental government witness in the trial of FTX founder Sam Bankman - Fried .
Ellison pleaded hangdog to seven felony counting of conspiracy and fraudulence and the federal sentencing guideline called for 110 years behind bar , but in handing down the much light condemnation Judge Lewis Kaplan pointed to her sodding cooperation with prosecutors and reliable testimonial during Bankman - Fried ’s trial . In addition to the prison time , Ellison was consecrate to forfeit $ 11 billion , the same amount the court ordered Bankman - Fried to wrick over .
“ I ’ve hear a lot of cooperators in 30 year . I ’ve never see one quite like Ms. Ellison , ” Kaplan said , harmonize to Bloomberg’sreportsfrom inside the courtroom , lead on to report her as “ vulnerable ” and “ tap . ”
Former Alameda Research CEO Caroline Ellison served as a key government witness in the trial of FTX founder Sam Bankman-Fried© Bloomberg/Getty Images
In a pre - sentencingmemo , federal prosecutors recommend lenient sentencing for Ellison , who they said met with governance investigators more than 20 multiplication and allow worthful document review article in addition totestifyingagainst Bankman - Fried . Her testimony , the prosecutors write , was “ critical to indict and convict Bankman - Fried , and to understand both the timeline of the shammer system , and the various stratum of wrongdoing . ” They noted that Ellison agreed to cooperate with investigators within days of FTX ’s bankruptcy declaration and that throughout the trial run she was subjected to “ extremely personal and searching ” public scrutiny after Bankman - Friedleaked her diaryto the New York Times .
verbalise during the sentencing earreach , Ellison justify for not being brave and said that “ since the collapse of FTX , it ’s been a rest period to be completely reliable and open with public prosecutor and investigators , ” according to Bloomberg .
Ellison was the CEO of Alameda Research , a cryptocurrency trading house connect to FTX , and attend to SBF in gyp lenders and client out of billions of dollars . Between 2019 and 2022 , Bankman - Fried and other company executives misappropriated client deposits in FTX to give themselves loans , make speculation investments , donate to political campaigns , and repay Alameda Research ’s lender . Ellison was a knowing participant in the scheme , at one point preparing fraudulent financial spreadsheet for Alameda ’s lenders that amplify its assets , understated its liabilities , and hide out the fact that the firm had misappropriated $ 10 billion in FTX customer alluviation to overcompensate its spending and to make $ 5 billion in personal loan to FTX executive director .
Prosecutors described Bankman - Fried , who wassentenced to 25 yearsin prison house earlier this year , as the driving force behind the fraud while Ellison was an confederate who from time to time raised concerns . The pair had an on - again , off - again romantic relationship and SBF “ wielded meaning influence over Ellison in their personal and professional relationship , ” they said . While Ellison jazz what she was doing was wrong and likely illegal , she also judge , unsuccessfully , to convince Bankman - Fried not to use FTX customer deposits to fund billions of venture investments . And days before FTX declared failure in November 2022 , Ellison frankly explain to an all - hands meeting at Alameda how FTX customer store had been misappropriate .
“ She accepted full responsibility from her very first proffer and did not minimize or shift inculpation , ” prosecutors wrote in their pre - sentencing memoranda . “ She was candid that although she raised concerns with Bankman - Fried at several points along the way , she finally put up minimum resistance to enter in wrongdoing and deception . She was also honest that she became more comfortable with lying and deceit the longer she worked at Alameda . ”
Caroline EllisonCryptoCryptocurrenciesSam Bankman - Fried
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