Caroline Ellison, the former CEO of Alameda Research, has been sentenced to 24 months in prison for her involvement in the collapse of FTX, and she is required to forfeit $11 billion. Ellison had pleaded guilty in December 2022 to two counts of wire fraud and five conspiracy counts, as part of a cooperation agreement with the government. Due to her “extraordinary” and “very timely” assistance, prosecutors recommended a lenient sentence. Her own legal team, along with the federal Probation Department, had requested no jail time.
Read: SpaceX to launch five uncrewed missions to Mars in next two years
During the sentencing, Judge Lewis Kaplan praised Ellison’s cooperation, stating, “I’ve seen a lot of cooperators in 30 years. I’ve never seen one quite like Ms. Ellison,” according to Bloomberg. Unlike Sam Bankman-Fried, her testimony was consistent and highly self-incriminating. However, Judge Kaplan emphasized that she was still responsible for her role in the fraud.
Ellison was a crucial witness in the trial of FTX cofounder Sam Bankman-Fried, testifying over three days. Prosecutors noted that her swift confession enabled them to indict Bankman-Fried quickly, preventing him from fleeing the Bahamas or obstructing the investigation further. They also highlighted her complete transparency in her meetings with the government.
In addition, Ellison assisted John J. Ray, the new CEO tasked with managing FTX’s restructuring, in locating and recovering customer assets. Ray acknowledged her early cooperation as “valuable” in recovering debtor assets. Ellison is negotiating an agreement to surrender most of her remaining assets to help settle FTX’s debts after fulfilling her forfeiture obligations.
Unlike Bankman-Fried, Ellison appears to genuinely regret her actions. This was evidenced not just by her cooperation but also by a taped confession where she apologized to her staff, which ultimately sealed Bankman-Fried’s fate.
Several factors mitigated her sentence. Ellison did not own equity in Alameda or FTX, and prosecutors found no evidence that she benefited financially from the fraud. Despite her cooperation, she has faced significant personal consequences, including public exposure of her private diaries and harassment from the crypto community. According to her lawyers, Ellison has struggled to find work and fears going out in public due to the intense scrutiny and backlash she has received. The government acknowledged that no other recent cooperating witness had endured such levels of attention and harassment.
