Caroline Ellison, former CEO of Alameda Research and a key witness in the prosecution of her ex-partner Sam Bankman-Fried (SBF), was sentenced Tuesday to two years in prison for her participation in the FTX fraud.
The sentencing came Tuesday in federal court in New York, where Judge Lewis Kaplan also ordered Ellison to forfeit $11 billion for his role in the massive fraud that led to the collapse of FTX, once valued at $32 billion.
FTX Collapse Claims Another Death
According to CNBC reportThe two-year prison sentence was significantly harsher than the one recommended by the federal Probation Department, which had suggested a three-year sentence of supervised release without incarceration. Ellison’s defense team had also asked that she not receive a prison sentence, arguing that the defense was lenient because of her cooperation with authorities.
Ellison’s company, Alameda Searchreceived a significant portion of the estimated $8 billion in customer funds embezzled by Bankman-Fried from FTX. Those funds were allegedly used for Alameda’s business operations and other businesses.
At sentencing, Judge Kaplan praised Ellison for his cooperation He also stressed the need for a sentence that would deter potential fraudsters, saying the case is likely the largest financial fraud in U.S. history.
The judge reportedly acknowledged Ellison’s emotional difficulties throughout the proceedings. He highlighted her unique cooperation, noting: “I’ve seen a lot of cooperators over the years, and I’ve never seen one like Ms. Ellison.”
Assistant U.S. Attorney Danielle Sassoon argued for a lighter sentence, noting Ellison’s truthful testimony and significant assistance in securing Bankman-Fried’s conviction earlier this year.
Out on bail until November 7
In her statement to Judge Kaplan, Ellison expressed remorse and said she was “deeply ashamed and apologized” to those affected by her actions. She admitted she failed to leave the “toxic environment” of FTX and Bankman-Fried, something she now regrets.
Judge Kaplan allowed Ellison to remain free on bail until her scheduled surrender date of November 7 or later. She had already reached a plea agreement with prosecutors in December 2022, pleading guilty to conspiracy and financial fraud charges following FTX bankruptcy.
Sam Bankman-Fried, however, opted for trial and was found guilty of all seven charges against him. sentenced to 25 years in prison in March 2024, along with an $11 billion forfeiture order. Bankman-Fried has since appealed his conviction, alleging bias by Judge Kaplan.
In addition, two former FTX executives, Gary Wang and Nishad Singh are awaiting trial later this year after also pleading guilty. Their cooperation, similar to Ellison’s, could influence the leniency of their sentences.
At the time of writing, the exchange’s native token, FTT, was trading at $1.425, up 5% and 12% over the 24-hour and seven-day time frames, respectively, as part of the broader market rally.
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