- Caroline Ellison was sentenced to 24 months in prison for her involvement in the FTX fraud case and must pay approximately $11 billion in restitution
- The judge acknowledged her cooperation during the trial against Sam Bankman-Fried, emphasizing her vulnerability and remorse
- Ellison’s testimony was pivotal in Bankman-Fried’s conviction, which resulted in a 25-year prison sentence
A federal judge on Tuesday sentenced Caroline Ellison, the former chief executive of Alameda Research, to 24 months, in prison. He said that Ellison, 29—who will also be required to pay roughly $11 billion—may be able to serve that sentence in a minimum-security facility near Boston, where her family resides. She will also serve three years on supervised release after serving her sentence.
Caroline Ellison Sentence
Despite the sentence, Judge Lewis A. Kaplan seemed sympathetic towards Ellison, who had been the key witness in the government’s case against Sam Bankman-Fried, founder and CEO of FTX and Ellison’s ex-boyfriend. “You were vulnerable and were exploited,” he said just minutes before announcing her sentence. “You are genuinely remorseful.”
In that respect, Kaplan appeared to underscore Ellison’s cooperation thus: “I’ve seen a lot in 30 years of cooperation, but I’ve never seen one like Miss Ellison.” He did, however, think that FTX was among the most significant frauds in terms of finance ever carried out in this country and that her cooperation was enough to spare Ellison a spot in prison.
“In such a serious case, being literally a ‘get out of jail free’ card is not something I can see all the way through,” Kaplan said before asking Ellison to stand and receive her 24-month prison sentence.
Because the crime is federal, Ellison will have to serve at least 75 percent of her time inside before she can benefit from supervised release.
Ellison took the stand as a star witness for the government against Bankman-Fried in his criminal trial last year, testifying that he conspired to bribe foreign officials and knowingly presented falsified financial figures to creditors. Her testimony was the “cornerstone” in Bankman-Fried’s conviction, prosecutors said in a sentencing memo ahead of Tuesday’s hearing.
Bankman-Fried was convicted on all seven counts of fraud and conspiracy against him and was sentenced to 25 years in prison this year. He has since appealed the conviction. U.S. Assistant Attorney Danielle Sassoon, one of the prosecutors who spearheaded Bankman-Fried’s trial, cited this memo during remarks to the judge on Tuesday.
Ellison’s Cooperation and Remorse: A Contrast to Bankman-Fried’s Defiance
Unlike Bankman-Fried, Ellison proactively cooperated with the Department of Justice, it was said. It wasn’t the first time she—or, for that matter, other speakers on Tuesday—had drawn comparisons between the two. Where Bankman-Fried showed no remorse, Ellison did; where Bankman-Fried’s sentence was meant to deter him and others from committing further crimes, Ellison’s sentence should reflect her cooperation, it was said.
Attorneys for Ellison, in their prehearing brief, said that she had provided “extraordinary cooperation” and that her non-risk of recidivism entitled her to a sentence of time served, plus three years of supervised release. Her attorneys and the probation department so recommended.
Ellison’s attorney, Wilmer Hale Managing Partner Anjan Sahni, said his client had been misled by Bankman-Fried, with whom she had an earlier romantic relationship. In an attempt to curry favor with Bankman-Fried, Ellison joined in the scheme; since the implosion of FTX, her lawyer said, “she regained her moral compass.”
Ellison, speaking briefly before her sentence was read, said she would like to apologize to FTX and former Alameda clients, her former colleagues, friends, and family. “The human brain is bad at understanding large numbers,” she said, her voice shaking. “I can’t even imagine the pain I’ve caused.”
Conclusion
Ellison has almost 45 days before she voluntarily surrenders to the Bureau of Prisons to commence serving her sentence.
“If you had told me back in 2018 that I was going to plead guilty to fraud, I’d have told you that you were insane,” Ellison continued. “At every juncture in this process, the harder it was to extract myself. I am sorry for being brave.“
