A former top executive of the fraudulent cryptocurrency firm FTX has been sentenced to two years in prison after expressing remorse for her involvement in one of the largest financial scams in history.
Caroline Ellison, 30, who served as CEO of Alameda Research and was a former romantic partner of FTX founder Sam Bankman-Fried, faced significant consequences as Bankman-Fried was sentenced to 25 years in prison for defrauding customers and investors out of billions in cryptocurrency.
Ellison, who testified against Bankman-Fried as the case’s key witness, received praise for her cooperation from US District Judge Lewis A. Kaplan. The judge noted that her testimony was “very, very substantial” and aligned with the prosecution’s case. However, he emphasized that a prison sentence was warranted due to her participation in what could be considered the “greatest financial fraud ever perpetrated in this country and probably elsewhere.”
He stressed that in such a serious matter, cooperation should not be treated as a way to evade punishment.
“I’ve seen many co-operators in my 30 years here, but I’ve never encountered anyone quite like Ms. Ellison,” he stated.
She is scheduled to report to prison on November 7.
Ellison pleaded guilty nearly two years ago and testified against Bankman-Fried for nearly three days during the trial last November. At her sentencing, she emotionally apologized to anyone affected by the fraud that occurred between 2017 and 2022.
“I’m deeply ashamed of what I’ve done,” she expressed, adding that she was “so, so sorry” to everyone she harmed, both directly and indirectly.
In court documents, prosecutors described her testimony as the “cornerstone of the trial” against Bankman-Fried, who was found guilty of fraud and sentenced to 25 years in prison.
Ellison’s lawyers requested a lighter sentence, highlighting her trial testimony and the trauma from her tumultuous relationship with Bankman-Fried, while emphasizing that she did not seek to evade responsibility for her actions.
“Caroline blames no one but herself for what she did,” her lawyers stated in a court filing. “She deeply regrets her role and will carry shame and remorse for the rest of her life.”
FTX was once one of the world’s most prominent cryptocurrency exchanges, known for its Super Bowl ad and extensive lobbying efforts in Washington before its collapse in 2022. US prosecutors accused Bankman-Fried and other executives of misappropriating customer funds to make risky investments, funnel illegal political donations, bribe Chinese officials, and purchase luxury real estate in the Caribbean.
As CEO of Alameda Research, a cryptocurrency hedge fund controlled by Bankman-Fried, Ellison processed some customer funds from FTX. Her professional relationship with Bankman-Fried was complicated by her feelings for him, as noted by her lawyers.
“From the beginning, Mr. Bankman-Fried’s behavior was erratic and manipulative,” her lawyers stated. “He initially expressed strong feelings for Caroline and suggested their relationship would evolve. However, after a few weeks, he would ‘ghost’ her without explanation, avoiding her outside of work and ignoring non-work-related messages.”
As the business began to decline, Ellison informed her employees about the massive fraud even before FTX filed for bankruptcy, according to her lawyers. She later cooperated extensively with US investigators.
“Ellison cooperated at great personal and professional cost, facing intense media scrutiny and attempted witness tampering by Bankman-Fried,” prosecutors noted. They emphasized that she was candid about her own misconduct and was “uniquely positioned to explain not only the what and how of Bankman-Fried’s crimes, but also the why.”
Since her testimony at Bankman-Fried’s trial, Ellison has engaged in charitable work, written a novel, and collaborated with her parents on a math enrichment textbook for advanced high school students, according to her lawyers. They also mentioned that she is now in a healthy romantic relationship and has reconnected with high school friends she lost touch with while working for and dating Bankman-Fried from 2017 until late 2022.