Caroline Ellison, former CEO of Alameda Research, was sentenced to 24 months in prison for her role in the collapse of FTX. She will also be ordered to pay $11 billion.
Ellison pleaded guilty to two counts of wire fraud and five counts of conspiracy in December 2022 as part of a cooperation agreement with the government. Prosecutors had recommended a lenient sentence because of Ellison’s “extraordinary” and “very timely” cooperation. Her own attorneys asked that she not be jailed, as did the federal Probation Department.
“I've seen a lot of cooperators in 30 years. I've never seen anyone like Ms. Ellison,” Judge Lewis Kaplan said during the sentencing hearing. According to BloombergIn stark contrast to Sam Bankman-Fried, there were no obvious inconsistencies in her testimony, which was “very self-incriminating”.
Still, she was culpable for her role in the fraud, Kaplan said.
Ellison was the key witness in the trial of FTX co-founder Sam Bankman-Fried, where she testified for three days. A statement filed by the prosecution before Ellison’s sentencing said the speed with which she confessed to what she had done allowed her to quickly charge her ex-boyfriend Bankman-Fried, “ensuring that he would not flee the Bahamas or further obstruct the government’s investigation.” The document also noted that Ellison was completely and immediately forthright in her meetings with the government.
Ellison has already suffered significant consequences
Ellison also quickly helped John J. Ray, the new chief executive tasked with cleaning up the FTX mess, locate and recover client assets, according to a written statement by Ray filed by the defense. His “early cooperation” was “valuable” in recovering the debtors’ assets, he wrote. Ellison is working on a settlement in which he will hand over “substantially all of his remaining assets after satisfying his forfeiture obligations” to FTX debtors.
In stark contrast to Bankman-Fried, Ellison appears to genuinely regret his role in the fraud. We know this not only from his cooperation agreement, but because he confessed and apologized to his staff in a meeting he didn’t know had been recorded. That recorded confession, in addition to sealing Bankman-Fried’s fate, also demonstrated his remorse.
There were other mitigating factors besides Ellison’s honesty. She was the only co-conspirator who did not own stock in Alameda or FTX, and “the government found no evidence that Ellison enjoyed any of the wealth generated by the fraud,” prosecutors wrote.
Ellison has already suffered significant consequences. His diaries have appeared in the pages of The New York TimesHer psychiatrist gave an interview about her to Michael Lewis for his book Going to infinityand was ridiculed in shockingly misogynistic language by large sections of the crypto community of which she was once a part. She has been unable to find paying work and is afraid to go out in public, according to documents filed by her lawyers. This account was corroborated by the prosecution, which wrote: “The government cannot think of another cooperating witness in recent history who has received a higher level of attention and harassment.”