By Jonathan Stempel
NEW YORK (Reuters) – U.S. prosecutors have called for leniency for former FTX cryptocurrency executive Caroline Ellison when she is sentenced for her role in the platform's collapse, citing her help sending FTX founder Sam Bankman-Fried to prison for 25 years.
In a letter sent Tuesday to U.S. District Judge Lewis Kaplan in Manhattan, prosecutors stopped short of recommending a specific punishment for Ellison.
But they said the 29-year-old's “extraordinary” cooperation justified a reduced sentence from what she might otherwise deserve after pleading guilty to fraud and conspiracy charges.
“The 'what' and 'how' of the crimes, as well as the 'why,' would have been difficult to prove without Ellison's testimony,” prosecutors said in the letter.
Ellison's attorneys did not immediately respond to requests for comment. They have asked that Ellison not serve time in prison after his scheduled sentencing on Sept. 24.
Bankman-Fried, a 32-year-old former billionaire, was accused of looting $8 billion from FTX clients, largely to cover up losses at his hedge fund Alameda Research, where Ellison was chief executive.
FTX collapsed in November 2022 and filed for bankruptcy.
Prosecutors said Ellison's assistance, including at least 20 meetings with the government and three days on the witness stand, was crucial to Bankman-Fried's conviction last November.
Ellison testified that Bankman-Fried, her ex-boyfriend, directed that FTX client funds be used to prop up Alameda and thought that following rules like “don’t lie” or “don’t steal” was less important than doing good for many people.
Prosecutors said Ellison persevered despite harsh public and media scrutiny, including harassment in court and ridicule on social media, and Bankman-Fried's effort to “weaponize” her personal writings to intimidate her.
“The government cannot think of another cooperating witness in recent history who has received a higher level of attention and harassment,” prosecutors said.
“Yet throughout the proceedings and certainly during her testimony, Ellison remained steadfastly truthful and dedicated to telling the truth (as embarrassing as it often was for her) and helping bring the most culpable party to justice.”
While prosecutors said Ellison could theoretically receive 110 years in prison because of the massive losses suffered by FTX clients, his punishment will likely be much lighter than the one Bankman-Fried received from Kaplan.
Bankman-Fried is appealing her conviction and sentence.
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