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 a major fraud and conspiracy. Doomed cryptocurrency exchange once valued at $32 billion.
The prison term was stiffer than the federal Probation Department’s recommendation so Judge Lewis Kaplan sentenced Ellison to three years of supervised release, with no time behind bars.
Defense attorneys also asked for a no-prison sentence for Ellison, who had run hedge fund Alameda Research, which had received much of the $8 billion in customer funds that Bankman-Fried looted from FTX. The stolen money was used for Alameda’s mercantile operations and other purposes.
Caroline Ellison, former CEO of Alameda Research LLC, right, arrives in court in New York on September 24, 2024.
Michael Ngale | Bloomberg Getty Images
While Kaplan praised Ellison for his extensive cooperation with prosecutors – which led to Bankman-Fried’s conviction – the judge said his criminal sentence was necessary to deter other potential bad actors from committing fraud.
The judge said the FTX case was probably the biggest financial fraud ever committed in the history of the United States, and because of that it was a “get out of jail free card that I can’t agree with,” Kaplan said in US District Court in Manhattan, where Ellison’s parents and two siblings seen from the courtroom gallery.
Caroline Ellison, former chief executive of Alameda Research LLC, at the podium giving her sentencing statement in court in New York, USA, on September 24, 2024.
Source: Elizabeth Williams
“I’ve seen a lot of cooperators over the years and I’ve never seen one like Miss Ellison,” said Kaplan, who also said he believes Ellison is truly remorseful for her crimes and that her cooperation has come at a high price. he is emotional.
Assistant US Attorney Danielle Sassoon urged Kaplan for leniency citing Ellison’s consistent truthfulness while refusing to minimize his role in the fraud. Sassoon also said he couldn’t count on Ellison’s help in convicting Bankman-Fried.
Ellison’s attorney, Anjan Sahni, urged Kaplan to give Ellison a second chance, saying he has a “sound moral compass” and “deep regret” for not leaving the orbit of FTX and Bankman-Fried.
Ellison read from a statement with a voice that wavered through tears as he apologized to those he had hurt and said he was deeply ashamed. He also thanked them for not being brave enough to walk away from FTX and Bankman-Fried.
Former cryptocurrency executive Caroline Ellison stood before US District Judge Lewis Kaplan, during a hearing where she was sentenced to two years in prison for her role in ex-boyfriend Sam Bankman-Fried’s theft of $8 billion in customer funds from the now bankrupt FTX exchange. he established, in the Federal Court in New York City, USA, September 24, 2024 in this courtroom sketch.
Jane Rosenberg Reuters
Kaplan allowed Ellison to remain free on bail until he surrenders to prison on or after November 7.
Ellison reached a deal with prosecutors in December 2022, a month after FTX filed for bankruptcy. He pleaded guilty to conspiracy and financial fraud charges.
Bankman-Fried, in contrast, chose to stand trial and was convicted of all seven counts of criminal fraud against the person in the same court where he was convicted.
He was sentenced to 25 years in prison in March and was also ordered to pay $11 billion in restitution by Kaplan.
Bankman-Fried has since appealed the conviction, and asked for a new trial and a different judge, arguing that Kaplan was prejudiced against him.
Two other former FTX executives, Gary Wang and Nishad Singh, are scheduled to be sentenced later this year. Like Ellison, he pleaded guilty rather than stand trial.
On Tuesday, before sentencing Ellison, Kaplan contrasted his actions after being charged with Bankman-Fried.
While the FTX founder denies criminal wrongdoing, he is cooperating with authorities, Kaplan said.
“It didn’t work out so well” for Bankman-Fried, partly because of Ellison’s cooperation, the judge said.
Kaplan credited Ellison for providing prosecutors with seven fake spreadsheets, which he called “one of the biggest pieces of evidence in the case” to Bankman-Fried.
Late Monday, Ellison’s attorneys said in a court filing that they had reached a financial settlement with prosecutors and the estate owed FTX.
The filing did not say how much he will pay in the settlement, which is separate from the forfeiture order, but it is understood that Ellison’s $10 million stake in AI startup Anthropic, which has seen significant growth since he bought it, provided it. the value of many of his settlements.
Bankman-Fried and Ellison face a maximum sentence of 110 years in prison for their crimes.
But defendants in criminal cases who cooperate with prosecutors rather than fight the charges especially in white-collar cases such as FTX, often receive leniency when sentenced.
