Caroline Ellison, whose testimony helped convict her former boss and ex-lover, notorious cryptocurrency mogul Sam Bankman Freed, was sentenced to two years in prison on Tuesday for fraud and conspiracy.
U.S. District Judge Lewis A. Kaplan sentenced Ellison to 24 months in prison in New York City and ordered him to forfeit $11 billion for his role in the collapse of Bankman Freed’s cryptocurrency exchange FTX. Ellison had faced a maximum sentence of approximately 110 years in prison.
Ellison, 29, accepted a plea deal on charges of conspiracy and financial fraud in December 2022, one month after FTX filed for bankruptcy. She testified against Bankman Freed for nearly three days at her November trial.
Bankman Freed was convicted of seven counts of fraud and sentenced to 25 years in prison, and prosecutors said in court filings that Ellison’s testimony was “central to the trial.”
Ellison’s lawyers had asked that she serve her sentence and be placed on probation due to her cooperation. In court documents filed this month, her lawyers said she promptly returned to the U.S. from FTX’s headquarters in the Bahamas in 2022 and voluntarily cooperated with the U.S. Attorney’s Office.
According to the documents, she actively worked with financial regulators to help them understand what went wrong at FTX and Alameda Research, a sister hedge fund she ran.
According to federal prosecutors, the unlimited credit line from FTX allowed Alameda Research to receive much of the $8 billion in FTX client funds looted by Bankman Freed, who used it for personal expenses, trading, repaying Alameda’s debt, and making political donations, Ellison and other witnesses allege.
Lawyer Anjan Sahni, who sought extra time in prison, said Ellison had “restored his moral compass” and “deeply regretted” not being able to free himself from Bankman Freed’s control.
Ellison read a statement in court in which he apologized to those he hurt and expressed shame for his role in the unrest.
However, Kaplan said that FTX’s collapse may be the largest financial fraud in U.S. history, and that he disagrees with giving the defendants “literal immunity.”
He ordered her to turn herself in to authorities after November 7.
In a 67-page court document filed Sept. 10, CEO John Ray, who has been guiding the crypto company FTX through bankruptcy proceedings, said Ellison’s cooperation with the government was “valuable” in helping the team preserve and protect “hundreds of millions of dollars” in assets.
Her lawyers wrote that Bankman-Freed forced her into a kind of isolation that “warped” her morality. At his direction, they said, Ellison helped “steal billions of dollars” and that she lived “in fear, knowing that a catastrophic collapse was likely, and fearing that stepping out would only hasten that collapse.” Her working relationship with Bankman-Freed was further complicated by their on-and-off romantic relationship.
Ellison’s lawyers said Bankman Freed persuaded Ellison to stay by telling him he loved her and that she was essential to the company’s survival, but “at the same time, perversely, indicated that she did not consider her worthy of appearing in public with him at high-profile events.”
Before its collapse in 2022, FTX was one of the world’s most popular cryptocurrency exchanges and was known for its extensive lobbying in Washington and Super Bowl commercials.
Bankman Freed and other executives were accused of looting funds from the exchange’s client accounts, making risky investments, buying luxury real estate in the Caribbean, making millions of dollars in illegal political contributions and bribing Chinese officials.
Former Bankman Freed executive Ryan Salameh was the first of FTX’s executives to be sentenced. In May, a judge sentenced him to seven and a half years in prison and ordered him to forfeit more than $6 million and pay more than $5 million in restitution.
Two other former executives, Nishad Singh and Gary Wang, are scheduled to be sentenced in October and November respectively.