Caroline Ellison Sentenced in FTX Fraud Case

Caroline Ellison to be sentenced after serving as star witness against FTX's Sam Bankman-Fried

Ex-Alameda CEO and ex-girlfriend of fallen crypto mogul pleaded guilty, but prosecutors signalled lenient sentence Caroline Ellison, the former crypto executive and romantic partner of the disgraced FTX founder Sam Bankman-Fried, is slated to be sentenced in Manhattan federal court on Tuesday. Ellison was a central figure in the FTX bankruptcy saga and key witness for the prosecution in the $8bn fraud trial that ended with Bankman-Fried's conviction. Ellison served as the CEO of Alameda Research, which was the trading arm of the now defunct FTX crypto exchange. The collapse of FTX, once valued at $32bn, was directly linked to revelations that it was attempting to financially prop up Alameda with fraudulent accounting. Subsequent investigations and criminal charges found that both FTX and the hedge fund had used billions in customer funds for risky trades and lavish personal spending. Judge Lewis Kaplan, the sentencing judge for Bankman-Fried and another FTX executive, is overseeing Ellison's case. Kaplan gave Bankman-Fried 25 years, but Ellison is unlikely to receive such a stiff sentence. Prosecutors have called her cooperation "not only substantial, but exemplary" in court filings and have not requested a specific sentence, signalling an openness to leniency. Ellison's attorneys have asked she be sentenced to three years supervised release with no prison time. Ellison pleaded guilty to seven charges in late 2022, which included wire fraud and money laundering, taking a plea deal that led her to become a witness against Bankman-Fried. During Bankman-Fried's trial last this year, she took the stand to testify in one of the most dramatic moments of the highly watched court proceedings, admitting that she committed fraud while running Alameda and telling a prosecutor that Bankman-Fried directed her to misuse FTX customers' funds without their knowledge. Ellison's testimony in the trial, along with that of other top executives, put the blame for FTX's catastrophic collapse almost entirely on Bankman-Fried. The prosecutors' filing stated that Ellison provided extremely valuable information in the case against Bankman-Fried, while also arguing that she had persevered through intense public scrutiny and media humiliation. "The Government cannot think of another cooperating witness in recent history who has received a greater level of attention and harassment," prosecutors wrote. Ellison's relationship with Bankman-Fried and a digital footprint that included Tumblr posts musing on polyamory became fodder for a wave of tabloid coverage and online mockery after FTX's dramatic implosion. While Bankman-Fried was awaiting trial last year, he also leaked Ellison's personal writings to the New York Times in a move that resulted in Judge Kaplan revoking his bail. Diary entries showed Ellison feeling underqualified and unprepared to run Alameda, as well as struggling over feelings related to her romantic partnership with Bankman-Fried. Numerous friends, colleagues and family members sent in letters to Judge Kaplan in support of Ellison. Her parents, both MIT professors, praised her charitable efforts and asked the court to forgive her actions. A former colleague at FTX meanwhile claimed that Ellison's drive to make money was the result of her belief in utilitarian ethics and desire to use her wealth to stop artificial intelligence from causing humanity's extinction. The same ex-colleague also stated that Ellison had found a new and supportive romantic partner, writing: "I believe that this new and kind environment will be good for her." Bankman-Fried, meanwhile, is appealing his sentence. Though he said he was "sorry about what happened at every stage" of FTX's rise and fall during his sentencing hearing, Judge Kaplan stated that he did not believe the former mogul showed any true remorse over his crimes. Another FTX executive, Ryan Salame, pleaded guilty to charges that included making unlawful political contributions and received seven and a half years in prison for his part in the crimes related to the exchange. Judge Kaplan's sentence for Salame exceeded prosecutors' recommendation, despite him agreeing to a plea deal that forced him to forfeit real estate and millions in fines. Unlike Ellison and other executives, however, Salame did not act as a cooperating witness.

A tearful Caroline Ellison is sentenced to two years in prison for her part in the FTX collapse: 'I'm sorry I wasn't brave'

On Tuesday, former FTX executive Caroline Ellison stood at a dais on the 21st floor of a Manhattan courthouse, her voice breaking as she asked a judge for a lenient sentence. Her parents and two younger sisters watched as she addressed the court. "My brain can't even comprehend the pain that I've caused," Ellison said in between tears. "That doesn't mean I haven't tried." Despite Ellison's plea for no prison time, with prosecutors acknowledging her extensive cooperation in building their case against Ellison's former boyfriend, Sam Bankman-Fried, Judge Lewis Kaplan sentenced her to two years in federal prison. Ellison will begin her sentence in early November and will be admitted to a minimum security prison, with Kaplan granting her request to serve her time at a facility close to her family in Boston. Ellison's downfall has become the subject of morbid fascination over the past two years, as the public has picked over the collapse of FTX, once valued at $32 billion, and its inner circle of 20 and 30-something executives, many of whom dated or counted each other as lifelong friends. Ellison joined Bankman-Fried's orbit as a trader at his hedge fund Alameda Research at just 24 years old, and soon becoming its CEO. As she acknowledged during three days of emotional testimony during Bankman-Fried's trial last fall, she also played a crucial role in the fraud that took down the empire, with FTX funneling billions in dollars of customer assets to fund disastrous trades at Alameda, along with luxury real estate, illegal campaign donations, and venture investments. On Tuesday, Ellison admitted once again that she should have stopped the fraud sooner, but she was unable to, drawn in by what she describes as her admiration -- and often unrequited love -- of Bankman-Fried. "I'm sorry I wasn't brave," she said. Despite her role in what Kaplan characterized as "the greatest financial fraud ever committed in this country," both Ellison's lawyers and prosecutors highlighted her work with the government and the FTX bankruptcy estate to recover assets for customers and build the case against Bankman-Fried. Assistant U.S. Attorney Danielle Sassoon argued that Ellison deserved a lenient sentence for her cooperation. After a lengthy monologue extolling the history of sentencing guidelines, Kaplan praised Ellison's work with prosecutors, saying that he had "never seen [a cooperator] quite like Ms. Ellison," with her testimony during Bankman-Fried's trial containing no errors or inconsistencies. Still, he questioned why she had followed such a dark path, musing that Bankman-Fried was her "kryptonite." His sentence of two years was notably stiffer than what Ellison's lawyers -- and the probation department -- recommended, although she is unlikely to serve the full time. She will also have to take part in remission process that would result in any recovered funds from the fraud going to victims of FTX's collapse. Ellison kept the vast majority of her savings on FTX and has not made an effort to regain any funds, and has surrendered her largest holding -- a $10 million investment in the AI giant Anthropic. According to her lawyers, she has also agreed to share any money she earns from telling her story of her role at FTX, so that she will be unable to profit from her time at the crypto empire. Bankman-Fried was sentenced to 25 years in prison in March, and former FTX executive Ryan Salame received 7.5 years in May after pleading guilty but deciding not to cooperate with prosecutors. Two other insiders, Nishad Singh and Gary Wang, are still awaiting sentencing.

Caroline Ellison's Day Of Reckoning: Will Sam Bankman-Fried's Former Colleague Face Prison Time For FTX Fraud?

The former executive of the collapsed cryptocurrency exchange FTX, Caroline Ellison, is set to be sentenced on Tuesday for her role in the sensational fraud case. What Happened: Prosecutors have requested a lighter sentence for Ellison, highlighting her "extraordinary cooperation" in the investigation, according to a report by AP News on Monday. Her legal team has also sought leniency, citing her testimony and the emotional distress caused by her on-and-off romantic relationship with disgraced founder Sam Bankman-Fried (SBF). However, they stressed that Ellison is not avoiding accountability for her actions. Ellison, who confessed her guilt nearly two years ago, provided crucial testimony against SBF in a trial last November. Her evidence played a significant role in SBF's conviction for fraud, resulting in his 25-year prison sentence. See Also: 'Well, It's Crypto, It's AI, It's Some Of The Other Things,' Says Donald Trump, Unsure Of What His New Crypto Project Even Is Ellison held the CEO position at Alameda Research, a cryptocurrency hedge fund controlled by Bankman-Fried that processed some customer funds from FTX. Her professional relationship with Bankman-Fried was further complicated by a romantic involvement, which her lawyers characterized as "erratic and manipulative." Why It Matters: FTX, once a leading player in the cryptocurrency exchange market, collapsed in 2022 following accusations of misappropriation of customer accounts, illegal political donations, and luxury Caribbean real estate purchases by SBF and his accomplices. The collapse precipitated the cryptocurrency winter, causing Bitcoin BTC/USD, the market's leading cryptocurrency, to plunge to lows of $16,000. Ellison's testimony against Bankman-Fried implicated him in directing fraudulent activities. According to a popular prediction market, Polymarket, bettors leaned toward the possibility of Ellison avoiding prison time, with 47% odds in favor of such an outcome. On the other hand, bets in favor of a 1-11 month sentencing reached 23% as of this writing. Apart from SBF's 25-year prison sentence, Ryan Salame, another prominent figure involved in the operations of the now-defunct platform, was awarded 90 months in prison. Photo by Sergei Elagin on Shutterstock Read Next: Trump Vs. Harris: 2024 Election Betting Odds Show Vice President Maintains Lead As Race Nears One-Month Mark Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors. Market News and Data brought to you by Benzinga APIs

Caroline Ellison gets 2 years for covering up Sam Bankman-Fried's FTX fraud

Caroline Ellison "deeply regrets" FTX lies, must now forfeit $11 billion. Caroline Ellison was sentenced Tuesday to 24 months for her role in covering up Sam Bankman-Fried's rampant fraud at FTX -- which caused billions in customer losses. Addressing the judge at sentencing, Ellison started out by explaining "how sorry I am" for concealing FTX's lies, Bloomberg reported live from the hearing. "I participated in a criminal conspiracy that ultimately stole billions of dollars from people who entrusted their money with us," Ellison reportedly said while sniffling. "The human brain is truly bad at understanding big numbers," she added, and "not a day goes by" that she doesn't "think about all of the people I hurt." Assistant US Attorney Danielle Sassoon followed Ellison, remarking that the government recommended a lighter sentence because it was important for the court to "distinguish between the mastermind and the willing accomplice." (Bankman-Fried got 25 years.) US District Judge Lewis Kaplan noted that he is allowed to show Ellison leniency for providing "substantial assistance to the government." He then confirmed that he always considered the maximum sentence she faced of 110 years to be "absurd," considering that Ellison had no inconsistencies in her testimony and fully cooperated with the government throughout their FTX probe. "I've seen a lot of cooperators in 30 years," Kaplan said. "I've never seen one quite like Ms. Ellison." However, although Ellison was brave to tell the truth about her crimes, Ellison is "by no means free of culpability," Kaplan said. He called Bankman-Fried her "Kryptonite" because the FTX co-founder so easily exploited such a "very strong person." Noting that nobody gets a "get out of jail free card," he sentenced Ellison to two years and required her to forfeit about $11 billion, Bloomberg reported. The judge said that Ellison "can serve the sentence at a minimum-security facility," Bloomberg reported. Ellison was key to SBF's quick conviction Ellison could have faced a maximum sentence of 110 years, for misleading customers and investors as the former CEO of the cryptocurrency trading firm linked to the FTX exchange, Alameda Research. But after delivering devastatingly detailed testimony key to exposing Bankman-Fried's many lies, the probation office had recommended a sentence of time served with three years of supervised release. Kaplan's sentence went further, making it likely that other co-conspirators who cooperated with the government probe will also face jail time. Both Ellison and the US government had requested substantial leniency due to her "critical" cooperation that allowed the US to convict Bankman-Fried in record time for such a complex criminal case. Partly because Ellison was romantically involved with Bankman-Fried and partly because she "drafted some of the most incriminating documents in the case," US attorney Damian Williams wrote in a letter to Kaplan, she was considered "crucial to the Government's successful prosecution of Samuel Bankman-Fried for one of the largest financial frauds in history," Williams wrote. Williams explained that Ellison went above and beyond to help the government probe Bankman-Fried's fraud. Starting about a month after FTX declared bankruptcy, Ellison began cooperating with the US government's investigation. She met about 20 times with prosecutors, digging through thousands of documents to identify and interpret key evidence that convicted her former boss and boyfriend. "Parsing Alameda Research's poor internal records was complicated by vague titles and unlabeled calculations on any documents reflecting misuse of customer funds," Ellison's sentencing memo said. Without her three-day testimony at trial, the jury would likely not have understood "Alameda's intentionally cryptic records," Williams wrote. Additionally, because Bankman-Fried systematically destroyed evidence, she was one of the few witnesses able to contradict Bankman-Fried's lies by providing a timeline for how Bankman-Fried's scheme unfolded -- and she was willing to find the receipts to back it all up. "As Alameda's nominal CEO and Bankman-Fried's former girlfriend, Ellison was uniquely positioned to explain not only the what and how of Bankman-Fried's crimes, but also the why," Williams wrote. "Ellison's testimony was critical to indict and convict Bankman-Fried, and to understanding both the timeline of the fraud schemes, and the various layers of wrongdoing." Further, where Bankman-Fried tried to claim that he was "well-meaning but hapless" in causing FTX's collapse, Ellison admitted her guilt before law enforcement ever got involved, then continually "expressed genuine shame and remorse" for the harms she caused, Williams wrote. A lighter sentence, Ellison's sentencing memo suggested, "would incentivize people involved in a fraud to do what Caroline did: publicly disclose a fraud, immediately accept responsibility, and cooperate immediately with civil and criminal authorities." Williams praised Ellison as exceptionally forthcoming, even alerting the government to criminal activity that they didn't even know about yet. He also credited her for persevering as a truth-teller "despite harsh media and public scrutiny and Bankman-Fried's efforts to publicly weaponize her personal writings to discredit and intimidate her." "The Government cannot think of another cooperating witness in recent history who has received a greater level of attention and harassment," Williams wrote. In her sentencing memo, Ellison's lawyers asked for no prison time, insisting that Ellison had been punished enough. Not only will she recover "nothing" from the FTX bankruptcy proceedings that she's helping to settle, but she also is banned from working in the only industries she's ever worked in, unlikely to ever repeat her crimes in finance and cryptocurrency sectors. She also is banned from running any public company and "has been rendered effectively unemployable in the near term by the notoriety arising from this case." "The reputational harm is not likely to abate any time soon," Ellison's sentencing memo said. "These personal, financial, and career consequences constitute substantial forms of punishment that reduce the need for the Court to order her incarceration." Kaplan clearly disagreed, ordering her to serve 24 months and forfeit $11 billion. Ellison's moral compass warped by FTX Back in December 2022, Ellison pleaded guilty to seven felony counts, including wire fraud, as well as conspiracy to commit wire fraud, commodities fraud, securities fraud, and money-laundering. Ever since, Ellison has suffered greatly, her sentencing memo said, noting that she now must "effectively" live "in hiding." Because Internet trolls have sought to dox her and her family has been barraged with "online harassment and threats, Ellison "is wary of going out in public." She expects this harassment is unlikely to ever end, and her "repeated efforts to find a paying job have been unsuccessful." But Ellison does not pity herself for being in this position, Williams wrote. While it's common for guilty parties to make "disingenuous" appeals "to the Court's mercy" to obtain lower sentences by making "self-serving" remarks expressing phony remorse, Williams told Kaplan that Ellison is a rare exception. She has "acknowledged her wrongdoing not out of self-interest, but because she understood that she had wronged her employees, FTX customers, Alameda's lenders, and others affected by FTX's collapse." Unlike Bankman-Fried's other co-conspirators in the FTX scheme, Ellison did not live a lavish life despite becoming wealthy while helming Alameda Research as its nominal CEO. Her mother explained in her sentencing memo that Ellison "finds it wasteful to spend money on luxuries when there are people in the world who do not have enough to eat." Where Bankman-Fried stole customer funds to enrich himself, the only "significant purchase" Ellison made was $10 million in shares in the AI company Anthropic, her sentencing memo noted. And the profits from that purchase will now be used to settle with FTX debtors and the US government. During the trial, Ellison explained how her moral compass was warped by her desire for Bankman-Fried's approval. She knew that she could have chosen not to follow his directions to misuse customer funds, her sentencing memo said, and she fully admitted that "she took actions that she knew to be wrong, helping him steal billions." Now, she's committed to helping anyone impacted by FTX's collapse to reclaim their losses, recently confirming that she had finalized a settlement agreement with FTX debtors that "she expects will leave her without anything she earned while employed at Alameda." Current FTX CEO John Ray attributed the protection of "hundreds of millions of dollars in Debtor assets" to Ellison quickly and diligently helping advisers understand FTX's systems, her sentencing memo said. For two years, she has aided in the recovery of lost funds "however she can," her lawyers noted. "She regrets her role deeply and will carry shame and remorse to her grave," Ellison's sentencing memo said. Other FTX conspirators to be sentenced soon FTX's former engineering head, Nishad Singh, is scheduled to be sentenced on Oct. 30, and FTX co-founder Gary Wang will be next on Nov. 20. Both cooperated with the government's investigation as Ellison did, and both had similarly pled guilty to charges. Now it appears likely that both will also serve time for their crimes. Bankman-Fried is currently appealing his conviction, claiming that the court never weighed evidence that he "thought FTX had enough funds to cover customer withdrawals," Reuters reported. But he may struggle to prove that, as Ellison's testimony repeatedly made clear that she advised against using customer funds for loans, because lenders could ask to be repaid at any time and they did not have the assets to cover repayments. At Bankman-Fried's direction, evidence showed she also manipulated balance sheets to make Alameda's assets appear larger and ensure that investors did not detect that Alameda "had been borrowing increasing money from FTX customers." As Ellison now faces a sentence of two years for her crimes, the support she's received from family and friends has been the only thing making her notoriety endurable, her sentencing memo said. She also has a new boyfriend whom friends say is "a vast improvement over" Bankman-Fried, valuing honesty to the point where "he finds even the small white lies of corporate politics distasteful." This indeed stands in stark contrast to Ellison's characterization of Bankman-Fried, which Williams said helped the government understand his motive for executing his fraudulent scheme. At trial, Ellison explained "Bankman-Fried's outsize appetite for risk, his desire for power and influence, and his cavalier attitude about honesty, in a compelling and credible manner," Williams said. And she never once claimed that Bankman-Fried's power over her should excuse her crimes, Williams noted, instead taking accountability for enabling the fraud that cost victims an estimated $12.7 billion. During the trial, Ellison repeatedly explained that the day that FTX collapsed, one of her most pronounced feelings was tremendous relief that she no longer had to hide all of Bankman-Fried's lies. "I felt a sense of relief that I didn't have to lie anymore, that I could start taking responsibility and being honest about what I had done, even though I obviously felt indescribably bad about all of the people that were harmed and the people that lost their money, the employees that lost their jobs, people that trusted us that we had betrayed," Ellison testified.