Caroline Ellison sentenced to two years for involvement in FTX fraud

The Federal Court of New York sentenced former Alameda Research CEO Caroline Ellison on Tuesday. The court sentenced 29-year-old Ellison to 24 months in prison for her involvement in one of the largest financial frauds in U.S. history. In addition to the prison term, she has been fined approximately $11 billion and will serve three years under court supervision after her release.

According to the court’s decision, Ellison may serve her sentence in a minimum-security correctional facility located near Boston, close to her family’s residence. Since the crime has federal status, she is required to serve at least 75% of the designated term before she can apply for early release. Ellison has approximately 45 days to voluntarily surrender to the Bureau of Prisons to begin serving her sentence.

Court’s Position: Acknowledgment of Vulnerability and Remorse

Judge Lewis A. Kaplan, who delivered the sentence, showed compassion for the defendant despite the seriousness of her actions. Before announcing the verdict, he noted: “You were in a vulnerable position, and you were exploited. You sincerely regret your actions.”

The judge particularly highlighted Ellison’s role as a key prosecution witness, calling her cooperation unprecedented. “In my 30 years of practicing law, I have seen many individuals cooperating with authorities, but I have never encountered someone demonstrating what Miss Ellison has,” Kaplan said. However, he emphasized that the magnitude of the crime does not allow for her to be fully exempt from imprisonment: “In the face of such a serious crime, I am not in a position to impose only a probationary sentence.”

Key Witness Against Bankman-Fried

Caroline Ellison testified in court as the main prosecution witness in the trial against Sam Bankman-Fried — founder of FTX and her former partner. She provided testimony about attempts to bribe foreign officials carried out by Bankman-Fried and about providing creditors with false financial reports.

Prosecutors described Ellison’s testimony as a “cornerstone” of the indictment. Assistant U.S. Attorney Daniel Sassoon emphasized during Tuesday’s court session that, unlike Bankman-Fried, Ellison voluntarily cooperated with the Department of Justice. She actively assisted the investigation and showed genuine remorse for her crimes.

Contrasting Comparison: Two Different Positions

The difference in sentences between Ellison and Bankman-Fried reflects their behavior before the court. Bankman-Fried was found guilty on all seven counts of fraud and conspiracy and received a 25-year prison sentence in early 2024. He is currently appealing his sentence.

During the proceedings, it was reiterated that Bankman-Fried showed no remorse for his actions, whereas Ellison demonstrated deep regret and responsibility. Ellison’s defense, from the law firm Wilmer Hale, claimed that she was misled by Bankman-Fried and, under the influence of their romantic relationship, participated in the illegal scheme. After the collapse of FTX, the lawyer noted, “she regained her moral compass.”

Words of Regret in the Courtroom

Before announcing the sentence, Caroline Ellison addressed the court personally. She apologized to the affected FTX and Alameda Research clients, her former colleagues, and family members. “The human brain struggles to comprehend huge sums of money,” Ellison said, her voice trembling with emotion. “I cannot fully imagine the pain I caused to people.”

She also reflected on her path to confession: “If you had told me in 2018 that I would ever plead guilty to fraud, I would have called you crazy. At every stage of the investigation, it became harder for me to find a way out. I regret not having the courage to act differently.”

Both the attorneys and probation services recommended a sentence with incarceration plus three years of probation, which the court approved.