Caroline Ellison, key witness in FTX fraud case, sentenced to two years in prison

(NEW YORK) — Caroline Ellison, a key witness in the FTX case, 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 former FTX CEO Sam 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 that 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.

Ahead of her sentencing in New York Tuesday afternoon, Ellison’s attorneys urged Judge Lewis 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,” prosecutor Danielle Sassoon wrote in a letter to the judge. “Ellison approached her cooperation with remarkable candor, remorse, and seriousness.”

Ellison faced 110 years in prison, according to court filings.

Prosecutors declined to make a specific sentencing recommendation. 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,” defense attorney Anjan 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.”

Bankman-Fried was sentenced in March to 25 years in prison. 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.