(NEW YORK) — Caroline Ellison, a key witness in the conviction of FTX co-founder Sam Bankman-Fried, was sentenced to two years in prison on Tuesday for her role in one of the largest financial frauds in history.
Ellison, 29, a former crypto executive, had pleaded guilty to multiple charges in connection with the federal fraud and conspiracy case involving the crypto trading platform. She cooperated with prosecutors and was a key witness during the trial last year of Bankman-Fried, her former boyfriend.
Ellison — who was the co-chief executive of Alameda Research, Bankman-Fried’s companion hedge fund — testified over three days during the trial, telling the court she committed fraud with her former on-again, off-again boyfriend and at his direction.
Bankman-Fried was ultimately found guilty on all counts for defrauding FTX customers out of $8 billion and sentenced to 25 years in prison.
During Ellison’s sentencing hearing in New York Tuesday afternoon, Judge Lewis Kaplan called her cooperation with the government “very, very substantial” and noted a “fundamental distinction” between Ellison and Bankman-Fried.
“She cooperated and he denied the whole thing,” Kaplan said. “I’ve seen a lot of cooperators in 30 years here. I’ve never seen one quite like Ms. Ellison.”
Still, the judge said even extraordinary cooperation could not be a “get out of jail free card.”
The judge called out another distinction between Ellison and Bankman-Fried.
“You are genuinely remorseful,” Kaplan said. “He’s sorry the gamble he took didn’t work out and he’s really sorry he got caught.”
Before the judge handed down the sentence, Ellison stood at a podium and apologized.
“I want to apologize most of all to the victims,” Ellison said, sniffling through tears. “Not a day goes by when I don’t think about all the people I hurt.”
Ellison said she was “deeply ashamed” by her conduct that enabled what the defense conceded was an “enormous and extraordinary fraud.”
It exposed Ellison to 110 years in prison, but her attorney sought a sentence without prison time.
“She has recovered her moral compass,” defense attorney Anjan Sahni said in court. “Caroline Ellison is a good person who, at 29 years old, can still make a positive impact on the world.”
Prosecutors agreed.
“Caroline Ellison deserves leniency,” Assistant United States Attorney Danielle Sassoon said. “A lenient sentence is also what is just.”
Sassoon noted Ellison consistently told the truth and never shied from her own culpability.
“This was a powerful contrast with Bankman-Fried’s testimony,” Sassoon said.
Ahead of her sentencing, Ellison’s attorneys urged Kaplan to be lenient, arguing Ellison “unflinchingly acknowledged her own wrongdoing, without minimization, blame shifting or self-pity.”
“She time and again proved herself an enormously credible and important cooperating witness” against Bankman-Fried, they added.
Federal prosecutors agreed Ellison provided “extraordinary cooperation that was crucial to the Government’s successful prosecution” of Bankman-Fried.
“Although she did not blow the whistle on any misconduct before FTX’s collapse, she came clean prior to FTX’s declaring bankruptcy to her employees on November 9, 2022,” Sassoon wrote in a letter to the judge. “Ellison approached her cooperation with remarkable candor, remorse, and seriousness.”
Prosecutors declined to make a specific sentencing recommendation in their filing. Defense attorneys suggested a sentence in line with a recommendation from probation officials of time served plus three years supervised release.
“Caroline poses no risk of recidivism and presents no threat to public safety. It would therefore promote respect for the law to grant leniency in recognition of Caroline’s early disclosure of the crimes, her unmitigated acceptance of responsibility for them, and — most importantly — her extensive cooperation with the government,” Sahni wrote in a letter to the judge.
Sahni outlined Ellison’s “complex” relationship with Bankman-Fried that began when the two met at Jane Street Capital in 2015 when she was an intern and he was a junior trader. He said their “on-again-off-again, sometimes-secret relationship” had “warped” her moral compass and led her to take actions “that she knew to be wrong, helping him steal billions.”
During Bankman-Fried’s sentencing hearing in March, Judge Kaplan also ordered that he forfeit $11 billion that the government can use to compensate victims.
The former crypto billionaire has filed an appeal to overturn his conviction.
Two former FTX executives who also pleaded guilty in the case — former director of engineering Nishad Singh and co-founder Gary Wang — are set to be sentenced in October and November, respectively.
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