Caroline Ellison, the The ex-girlfriend of convicted crypto fraudster Sam Bankman-Fried has been sentenced to two years in prison for her role in the fraud scheme that led to the collapse of FTX.
Ellison had pleaded guilty to money laundering and fraud and had been the prosecution’s key witness in the trial against Bankman-Fried. Ellison was CEO of Alameda Research, a sister company of FTX that had embezzled billions in customer funds from the crypto exchange.
Accordingly The Wall Street JournalEllison said at her sentencing on Tuesday, September 24: “To all the victims and to everyone I have harmed, directly or indirectly, I am so, so sorry. I cannot even imagine the pain I have caused.”
Ellison has been free on bail since December 2022. Her lawyers had tried to keep her out of prison, and prosecutors did not even recommend a specific sentence, calling her cooperation “not only substantive, but exemplary.” Still, Judge Lewis Kaplan handed down the sentence, saying her sincere remorse and cooperation should not serve as a “get out of jail free card.” (After her two years in prison, Ellison will also have to serve three years of probation.)
Ellison was one of three top FTX executives and employees who reached a settlement following FTX’s collapse in November 2022. FTX was once the world’s third-largest crypto exchange, but collapsed days after financial statements related to Alameda Research were leaked. The documents led to allegations that Bankman-Fried used FTX customers’ investments to pay off debts and make side investments and contributions, transferring funds without proper disclosure and oversight.
Ellison dropped several bombshells during her testimony at Bankman-Fried’s trial, including that Bankman-Fried and others bribed a Chinese official with $100 million to release $1 billion worth of Alameda funds stuck on a China-based crypto exchange. She also said that in the fall of 2022, shortly before FTX’s collapse, Bankman-Fried tried to raise capital by selling shares in FTX to Saudi Prince Mohammed bin Salman – a cash infusion that also helped cover up the alleged fraud.
“If we were able to raise money, we could use that money to repay the money we had borrowed from FTX customers,” Ellison said during the trial.
As for her romantic relationship with Bankman-Fried, Ellison said on the witness stand that she often felt like an “unequal partner” in their relationship. The trial was also marred by Bankman-Fried’s alleged attempts to intimidate Ellison: He was denied bail for leaking her personal writings about their relationship to The New York Timesand prosecutors tried to argue that he intimidated her by laughing and mocking her during her testimony.
Bankman-Fried was ultimately found guilty and sentenced to 25 years in prison. He spent the last year in a Brooklyn jail while his lawyers prepared an appeal that was finally filed earlier this month. (He also reportedly sleeps in the same cell as Sean Combs.)
