Caroline Ellison, the former CEO of Alameda Research and a pivotal witness in the prosecution of her ex-partner Sam Bankman-Fried (SBF), received a two-year prison sentence on Tuesday for her involvement in the FTX fraud scandal.
Details of the Sentencing
The sentencing occurred in a New York federal court, presided over by Judge Lewis Kaplan. In addition to the prison term, Ellison was ordered to forfeit a staggering $11 billion due to her significant role in the massive fraud that led to the collapse of FTX, a company once valued at $32 billion.
FTX Collapse Claims Another Inmate
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According to a CNBC report, Ellison’s two-year prison term was notably harsher than the recommendation from the federal Probation Department, which had suggested a sentence of three years of supervised release without incarceration. Her defense team had also argued for leniency, requesting no prison time due to her cooperation with the authorities.
Alameda Research, under Ellison’s leadership, received a significant portion of the estimated $8 billion in customer funds misappropriated by Bankman-Fried from FTX. These funds were allegedly used to support Alameda’s trading operations and other ventures.
Judge Kaplan’s Remarks
During the sentencing, Judge Kaplan commended Ellison for her cooperation with the prosecution, which was instrumental in Bankman-Fried’s conviction. However, he stressed the importance of a deterrent sentence, stating, “This case is probably the greatest financial fraud perpetrated in the history of the US.”
The judge also acknowledged Ellison’s emotional struggles throughout the proceedings, commenting on her unique cooperation. He noted, “I’ve seen a lot of cooperators over the years, and I’ve never seen one quite like Miss Ellison.”
Prosecution’s Stand
Assistant US Attorney Danielle Sassoon advocated for a lighter sentence, highlighting Ellison’s truthful testimony and significant assistance in securing Bankman-Fried’s conviction earlier this year.
Ellison’s Apology and Bail
In her court statement, Ellison expressed deep remorse and apologized to those affected by her actions. She admitted regretting her failure to leave the “toxic environment” of FTX and Bankman-Fried.
Judge Kaplan allowed Ellison to remain free on bail until her scheduled surrender date on or after November 7. She had previously reached a plea deal with prosecutors in December 2022, pleading guilty to conspiracy and financial fraud charges following FTX’s bankruptcy.
Sam Bankman-Fried’s Trial and Other Sentencings
In contrast to Ellison, Sam Bankman-Fried opted for a trial and was found guilty on all seven counts against him. He received a 25-year prison sentence in March 2024, along with an $11 billion forfeiture order. Bankman-Fried has since appealed his conviction, alleging bias from Judge Kaplan.
Furthermore, two former FTX executives, Gary Wang and Nishad Singh, are awaiting sentencing later this year after also pleading guilty. Their cooperation, similar to Ellison’s, may influence the leniency of their sentences.
FTT Token Performance
At the time of writing, FTX’s native token, FTT, was trading at $1.425, up 5% and 12% over the 24-hour and seven-day periods, respectively, amid a broader market rally.
