Caroline Ellison Sentenced to 24 Months in Prison for Role in FTX Collapse
Caroline Ellison has been sentenced to 24 months in prison for her involvement in the FTX collapse, despite assisting prosecutors in securing the conviction of her former boss and boyfriend, Sam Bankman-Fried.
During the sentencing on Tuesday, US District Judge Lewis Kaplan acknowledged Ellison’s “remarkable” cooperation and praised her testimony during the fraud trial. However, he emphasized that her cooperation should not serve as a “get out of jail free card,” given the case’s significance as one of the “most serious” financial frauds ever committed.
Ellison’s sentencing marks a pivotal moment in the aftermath of the FTX collapse, where a group of young crypto executives turned against Bankman-Fried and collaborated with prosecutors to avoid prison time. The FTX bankruptcy, filed in late 2022, revealed a years-long scheme that allegedly defrauded customers, investors, and lenders of around $10 billion.
Alongside her prison term, Ellison has been ordered to forfeit $11 billion as proceeds from the crime—a sum neither she nor Bankman-Fried is expected to repay. Additionally, she will serve three years of probation following her prison sentence, with her surrender date set for on or after November 7.
In a brief statement in court, Ellison expressed remorse, apologizing to the lenders, investors, and victims affected by her actions. “Not a day goes by that I don’t think about all of the people I hurt,” she said, tearing up. “I’m sorry I wasn’t brave.”
As the former CEO of Alameda Research, a hedge fund controlled by Bankman-Fried, Ellison used FTX customer funds for high-risk investments. She pleaded guilty to fraud and money laundering charges, and her sentence may serve as a predictor for the outcomes of two other main cooperators in the case, FTX co-founder Gary Wang and former engineering chief Nishad Singh. Meanwhile, Bankman-Fried is currently serving a 25-year prison sentence for orchestrating the fraud.
Throughout her testimony, Ellison detailed how she conspired with Bankman-Fried to mislead lenders and customers, revealing their futile attempts to prevent the company’s collapse. She recounted preparing seven “alternative balance sheets” at Bankman-Fried’s request, which obscured the borrowing of around $10 billion from FTX customers and the $5 billion lent to FTX executives and related entities.
Kaplan highlighted this as one of the case’s crucial pieces of evidence, noting her ability to recall the creation of these documents during interviews with prosecutors. Ellison also provided testimony regarding discussions among herself, Bankman-Fried, and other FTX and Alameda employees about a purported bribe to Chinese officials aimed at unfreezing $1 billion in Alameda funds tied up in a money-laundering investigation.
Ellison met with the government over 20 times and guided investigators through the details of the FTX fraud. Bankman-Fried was found guilty on all charges last year after a brief jury deliberation, and he is currently appealing his conviction, claiming that the judge hampered his defense.
Prior to the hearing, prosecutors commended Ellison’s cooperation as “exemplary,” stating in their memo to the judge that they couldn’t recall another cooperating witness in recent history who had faced such extensive attention and harassment.
