Sentencing of Caroline Ellison

Former co-CEO of Alameda Research, Caroline Ellison, was sentenced to two years for her involvement in the collapse of the FTX crypto exchange, which caused massive financial losses for consumers.

Background

Ellison, who previously dated ex-FTX CEO Sam Bankman-Fried, pled guilty in December 2022 to several conspiracy charges related to wire fraud, commodities fraud, securities fraud, and money laundering. Alameda Research, closely linked to FTX, was also founded by Bankman-Fried.

She is required to forfeit approximately $11 billion and will serve her sentence in a minimum-security facility, as reported by Bloomberg.

Apology and Cooperation

In her court address, Ellison expressed remorse for her actions, stating, “not a day goes by that I don’t think about all of the people I hurt.” She cooperated with government investigations and testified against Bankman-Fried, revealing how he directed her actions contributing to the downfall of FTX.

During Bankman-Fried’s trial, she acknowledged misleading banks about Alameda’s financial position at his instruction.

Judge’s Statements and Sentencing

Judge Lewis Kaplan noted that the main distinction between Ellison and Bankman-Fried was her cooperation. Ellison’s attorneys had requested no jail time, referencing recommendations from the federal Probation Department for time served and three years of supervised release. Experts believe her cooperation significantly influenced the Probation Department’s leniency.

Nevertheless, the scandal’s widespread impact prompted discussions about accountability, with Judge Kaplan emphasizing the need for a balance between leniency for cooperators and holding perpetrators accountable.

Further Context

Other former FTX executives, like Gary Wang and Nishad Singh, also face charges but have cooperated with authorities. Wang’s sentencing is scheduled for Nov. 20, and Singh’s for Oct. 30. Bankman-Fried received a 25-year sentence earlier this year, alongside a restitution order that may reach $11 billion.