Caroline Ellison, the star witness in the prosecution of her ex-boyfriend, FTX founder Sam Bankman-Fried, was sentenced Tuesday in New York federal court to two years in prison and ordered to forfeit $11 billion for her role in the massive fraud and conspiracy. the cryptocurrency exchange that was once valued at $32 billion was condemned.
The prison sentence was far more severe than the federal Probation Department’s recommendation that Judge Lewis Kaplan sentence Ellison to three years of supervised release, with no time behind bars.
Defense attorneys had also sought prison time for Ellison, who ran hedge fund Alameda Research, which had received much of the $8 billion in client funds looted by Bankman-Fried from FTX. The stolen money was used for Alameda’s business operations and other purposes.
Caroline Ellison, former CEO of Alameda Research LLC, right, arrives in court in New York on September 24, 2024.
Michael Nagle | Bloomberg | Getty Images
While Kaplan praised Ellison for her extensive cooperation with prosecutors — which led to Bankman-Fried’s conviction — the judge said her criminal sentence should deter other potential bad actors from committing fraud.
The judge said the FTX case is probably the largest financial fraud committed in the history of the United States, and that’s why it’s a “literal get-out-of-jail-free card that I can’t agree with,” Kaplan said. U.S. District Court in Manhattan, where Ellison’s parents and two sisters looked on from the courtroom gallery.
Caroline Ellison, former CEO of Alameda Research LLC, on the stand giving her sentencing in court in New York, U.S., on September 24, 2024.
Courtesy: Elizabeth Williams
“I’ve seen a lot of partners over the years and I’ve never seen one quite like Miss Ellison,” said Kaplan, who also said he believed Ellison was genuinely remorseful for her crimes and that her partnership had come at a high price. for her emotionally.
Assistant U.S. Attorney Danielle Sassoon urged Kaplan for leniency, citing Ellison’s steadfast honesty while refusing to minimize her role in the fraud. Sassoon also said she couldn’t overstate Ellison’s help in convicting Bankman-Fried.
Ellison’s attorney, Anjan Sahni, urged Kaplan to give Ellison a second chance, saying she has “regained her moral compass” and “deeply regrets” not abandoning the path of FTX and Bankman-Fried.
Ellison read from a statement in a shaky voice while at times crying as she apologized to the people she had hurt and said she was deeply ashamed. She also said she regrets not being brave enough to walk away from FTX and Bankman-Fried.
Former cryptocurrency executive Caroline Ellison stands before US District Judge Lewis Kaplan during a hearing where she was sentenced to two years in prison for her role in the theft of $8 billion in client funds from the now-defunct FTX exchange by ex-boyfriend by Sam Bankman-Fried. established, in Federal Court in New York, USA, on September 24, 2024 in this sketch of the courtroom.
Jane Rosenberg | Reuters
Kaplan allowed Ellison to remain free on bond until she surrenders to jail either on or after Nov. 7.
Ellison arrived at a agreement with prosecutors in December 2022one month after FTX’s bankruptcy. She pleaded guilty on charges of conspiracy and financial fraud.
Bankman-Fried, in contrast, chose to stand trial and was convicted of all seven counts of fraud against him in the same court where she was convicted.
He was sentenced to 25 years in prison in March and also ordered to pay $11 billion in restitution to Kaplan.
Bankman-Fried has since appealed his conviction and asked for a new trial and a different judge, arguing that Kaplan was biased against him.
Two other former FTX executives, Gary Wang and Nishad Singh, are scheduled to be sentenced later this year. Like Ellison, they pleaded guilty rather than stand trial.
On Tuesday, before sentencing Ellison, Kaplan disputed her behavior after being accused of Bankman-Fried’s.
While the FTX founder had denied criminal conduct, she cooperated with authorities, Kaplan noted.
“It didn’t work out so well” for Bankman-Fried, in part because of Ellison’s cooperation, the judge said.
Kaplan credited Ellison with providing prosecutors with seven fake spreadsheets, which he called “one of the huge pieces of evidence in the case” against Bankman-Fried.
Late Monday, Ellison’s attorneys said in a court filing that they had finalized financial settlements with prosecutors and the estate of the FTX debtor.
The filing did not say how much he would pay in those settlements, which are separate from the forfeiture order, but it was already known that Ellison’s $10 million in stock in artificial intelligence startup Anthropic, which has grown significantly since he bought it for the first time, they provide the mass value of its settlements.
Both Bankman-Fried and Ellison had faced the same maximum sentence of about 110 years in prison for their crimes.
But criminal defendants who cooperate with prosecutors rather than fight the charges, particularly in white-collar cases like FTX, often receive leniency when convicted.
