Caroline Ellison Sentenced to Two Years for Role in FTX Fraud After Testifying Against Sam Bankman-Fried
Caroline Ellison, former CEO of Alameda Research and key witness in the case against FTX founder Sam Bankman-Fried, has been sentenced to two years in prison. A federal judge handed down the sentence after recognizing her crucial cooperation with prosecutors, which played a pivotal role in convicting Bankman-Fried in one of the largest financial fraud cases in U.S. history.
Judge Lewis Kaplan acknowledged Ellison’s “very, very substantial cooperation” during her testimony, which helped expose the fraudulent activities orchestrated by Bankman-Fried. “I am deeply ashamed of what we had done,” Ellison said emotionally during the hearing, expressing remorse for her involvement in the multi-billion-dollar scam.
Ellison, 29, was among the first to plead guilty to charges of fraud and conspiracy related to the collapse of FTX and its close ties to Alameda Research. Her testimony revealed that Bankman-Fried directed many of the fraudulent activities, including the misappropriation of $8 billion in customer funds. Despite her own culpability, Ellison’s detailed cooperation significantly reduced her sentence.
FTX, a cryptocurrency exchange once valued in the billions, collapsed in November 2022 when customers rushed to withdraw funds following concerns about its financial stability. The downfall exposed close financial links between FTX and Alameda, triggering one of the largest crypto-related scandals.
Ellison’s cooperation was seen as “extraordinary” by prosecutors, which factored into the relatively lenient sentence despite her involvement in the scheme. However, Judge Kaplan noted that even with her assistance, the scale of the fraud required a prison term. Sam Bankman-Fried was sentenced to 25 years for his role in the massive fraud.
Other former FTX executives, including Nishad Singh and Gary Wang, are also awaiting sentencing after agreeing to testify against Bankman-Fried. Ryan Salame, another executive, has already been sentenced to more than seven years in prison for campaign finance violations and other charges.
Ellison’s case highlights the gravity of the fraud and the far-reaching consequences of FTX’s collapse, which left many investors and customers locked out of their funds. Though efforts are being made to repay creditors, the fallout continues to reverberate across the cryptocurrency industry.