Caroline Ellison, a former top executive in Sam Bankman-Fried ’s fallen FTX cryptocurrency empire, was sentenced to two years in prison on Tuesday after she apologized repeatedly to everyone hurt by a fraud that stole billions of dollars from investors and customers of what once seemed like a groundbreaking company in an emerging financial industry.
U.S. District Judge Lewis A. Kaplan said Ellison's cooperation in the case was “very, very substantial” and praised her testimony, saying he saw no inconsistencies with documents shown to the jury or things she had previously told prosecutors.
But he said a prison sentence was necessary because she had participated in what might be the “greatest financial fraud ever perpetrated in this country and probably anywhere else” or at least close to it.
He said in such a serious case, he could not let cooperation be a get-out-of-jail-free card.
“I’ve seen a lot of cooperators in 30 years here. I’ve never seen one quite like Ms. Ellison,” he said.
She was ordered to report to prison Nov. 7.
RELATED STORY | Fallen crypto mogul Sam Bankman-Fried sentenced to 25 years in prison
Ellison, 29, pleaded guilty nearly two years ago and testified against Bankman-Fried for nearly three days at a trial last November.
At sentencing, she emotionally apologized to anyone hurt by the fraud that stretched from 2017 through 2022.
“I'm deeply ashamed with what I've done,” she said, fighting through tears to say she was “so so sorry” to everyone she had harmed directly or indirectly.
In a court filing, prosecutors said said her testimony was the “cornerstone of the trial” against Bankman-Fried, 32, who was found guilty of fraud and sentenced to 25 years in prison.
Asking the court for a lighter sentence, Ellison's own lawyers cited both her testimony at the trial and the trauma of her off-and-on romantic relationship with Bankman-Fried — though they also stressed that she wasn't trying to evade responsibility for her crimes.
“Caroline blames no one but herself for what she did,” her lawyers wrote in a court filing. “She regrets her role deeply and will carry shame and remorse to her grave.”
FTX was one of the world's most popular cryptocurrency exchanges, known for its Superbowl TV ad and its extensive lobbying campaign in Washington, before it collapsed in 2022.
U.S. prosecutors accused Bankman-Fried and other top executives of looting customer accounts on the exchange to make risky investments, make millions of dollars of illegal political donations, bribe Chinese officials and buy luxury real estate in the Caribbean.
Ellison was chief executive at Alameda Research, a cryptocurrency hedge fund controlled by Bankman-Fried that was used to process some customer funds from FTX.
Her work relationship with Bankman-Fried was complicated by her romantic feelings for him, her lawyers wrote in a court filing.
“From the start, Mr. Bankman-Fried’s behavior was erratic and manipulative. He initially professed strong feelings for Caroline and suggested their liaison would develop into a full relationship. But after a few weeks, he would ‘ghost’ Caroline without explanation, avoiding her outside of work and refusing to respond to messages that were not work-related,” her lawyers said.
As the business began to falter, Ellison divulged the massive fraud to employees who worked for her even before FTX filed for bankruptcy, her lawyers wrote.
Ultimately, she also spoke extensively with U.S. investigators.
“Ellison cooperated at great personal and professional cost, enduring harsh media and public scrutiny and attempted witness tampering by Bankman-Fried,” prosecutors wrote.
They said she was forthcoming about her own misconduct and was “uniquely positioned to explain not only the what and how of Bankman-Fried’s crimes, but also the why."
“In her many meetings with the Government, Ellison approached her cooperation with remarkable candor, remorse, and seriousness,” they wrote. “She dedicated herself to extensive document review that helped identify key corroborating documents in an investigation hamstrung by Bankman-Fried’s systematic destruction of evidence.”
Her testimony at the trial, they said, was credible and compelling.
Since testifying at Bankman-Fried’s trial, Ellison has engaged in extensive charity work, written a novel and worked with her parents on a math enrichment textbook for advanced high school students, according to her lawyers.
They said she also now has a healthy romantic relationship and has reconnected with high school friends she had lost touch with while she worked for and sometimes dated Bankman-Fried from 2017 until late 2022.
