Former crypto bigwig Caroline Ellison received a jail sentence Tuesday for the financial crimes committed alongside her ex-boyfriend Sam Bankman-Fried, landing time behind bars despite some legal experts suggesting Ellison may skirt jail time for her extensive cooperation against Bankman-Fried, the former billionaire head of the $32 billion cryptocurrency exchange FTX.
Caroline Ellison, center, leaves court last October after testifying against Bankman-Fried.
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Key Takeaways
- Axios and Bloomberg reported New York-based federal Judge Lewis Kaplan gave a 24-month sentence to the 29-year-old Ellison, who pled guilty in Dec. 2022 for a similar slate of crimes as Bankman-Fried, including wire fraud and conspiracy to commit money laundering.
- Ellison can serve her time at a minimum-security institution, according to Bloomberg.
- Though Kaplan said he’d “never seen” a cooperator as strong as Ellison, she was “not inviolable” and Bankman-Fried had her “Kryptonite,” reported Bloomberg.
- Ellison served as the chief executive of the crypto hedge fund Alameda Research, the sister firm of FTX, and Alameda’s unraveling as it lost FTX customer funds led to the eventual bankruptcies of both firms and the arrests of Bankman-Fried, Ellison and other executives.
- “I participated in a criminal conspiracy that ultimately stole billions of dollars from people who entrusted their money with us,” Ellison said at court Tuesday, adding it was a “relief” to fully cooperate.
- Though Bankman-Fried—who pleaded not guilty—received a 25-year prison sentence in March following a criminal trial, all indications pointed to a far lighter punishment for Ellison, who prosecutors described as an “exemplary” witness and called on Kaplan to levy a “lenient sentence” Tuesday.
Was Caroline Ellison Expected To Get Prison Time?
Prosecutors last week indicated they supported a more lenient sentence for Ellison due to her “extraordinary cooperation,” without sharing a recommended sentence, while Ellison’s attorneys have put forth three years of supervised release and no prison time. Several legal experts said it was a real possibility Ellison could avoid a prison sentence.
Former Assistant U.S. Attorney Kevin J. O’Brien told CNBC supervised release may be a “a “fair sentence” considering her help in nailing the “elusive” Bankman-Fried. Fellow former federal prosecutor Rebecca Mermelstein told the Washington Post that Ellison could avoid prison due to the government’s belief she “deserves a lot of credit” for her flip against Bankman-Fried. Joshua Naftalis, another former federal prosecutor, told Business Insider it’s “typical though not guaranteed” for a star witness like Ellison to avoid prison.
Crucial Quote
“I would tell her to be less risk-averse and believe in herself more,” Ellison wrote in a 2021 application for Forbes’ 30 Under 30 list in a prompt asking for her advice to her younger self.
Key Background
Considered one of the most significant white-collar crimes in U.S. history, the Alameda and FTX fraudulent scheme was unearthed beginning in Nov. 2022 as it was revealed that executives at the closely related firms greenlit the illicit transfer of FTX customer funds to cover Alameda’s trading losses. Ellison and the 32-year-old Bankman-Fried first met in 2015 at quantitative trading firm Jane Street, and later dated on-and-off from 2020 to 2022. “Caroline Ellison and Sam Bankman-Fried schemed to…prop up the value of their house of cards,” Securities and Exchange Commission Chairman Gary Gensler asserted in 2022.
This article was originally published on forbes.com and all figures are in USD.
