Caroline Ellison is sentenced to two years in prison in the FTX fraud case

Former Alameda Research CEO Caroline Ellison received a 24-month prison sentence on Tuesday, September 24, 2024, imposed by a federal judge in New York. In addition to the incarceration, Ellison, who is 29 years old, will have to pay approximately US$ 11 billion in restitution to those harmed. The judge allowed her to serve her sentence in a minimum-security facility near Boston, where her family resides. After leaving prison, she will be under three years of supervised release.

Caroline Ellison’s Extraordinary Cooperation

During the sentencing hearing, Federal Judge Lewis A. Kaplan expressed a relatively lenient stance towards Ellison, acknowledging her change of attitude regarding the crimes committed. “You were vulnerable and exploited,” Kaplan stated minutes before announcing the sentence. “You are genuinely remorseful.” The magistrate repeatedly emphasized the exceptional quality of her cooperation with authorities, commenting that in his 30 years of experience, he had never seen a cooperator like Ellison.

Despite this positive assessment, Kaplan highlighted the severity of the case. FTX represented one of the largest financial frauds committed in the country, and even Ellison’s exemplary cooperation would not be enough to spare her from a prison sentence. “In such a serious case, being literally a ‘get-out-of-jail-free card’ is not something I can see my way to,” the judge declared before sentencing her to 24 months of incarceration.

Caroline Ellison played a crucial role during the criminal trial of Sam Bankman-Fried, the founder and former CEO of FTX. Her testimony was instrumental in demonstrating that Bankman-Fried attempted to bribe foreign officials and intentionally shared misleading financial information with creditors. Prosecutors described her testimony as the “cornerstone” in Bankman-Fried’s conviction, who faced seven counts of fraud and conspiracy.

The Contrast Between the Cases: Remorse versus Coldness

The differences in how Caroline Ellison and Sam Bankman-Fried are treated illustrate how cooperation and remorse influence sentences. Bankman-Fried was convicted on all charges and received a 25-year prison sentence in early 2024, currently under appeal. Unlike Ellison, he did not show genuine remorse for his actions.

U.S. Assistant Attorney Danielle Sassoon, one of the prosecutors against Bankman-Fried, emphasized this distinction during the hearing. While Bankman-Fried maintained a defensive attitude, Ellison actively cooperated with the Department of Justice from the beginning. Bankman-Fried’s sentence aimed at deterrence—preventing him and others from committing similar crimes—while Ellison’s sentence reflects her voluntary cooperation with authorities.

Remorse and the Pursuit of Rehabilitation

Caroline Ellison’s lawyers argued before the court that their client had provided “extraordinary cooperation” and posed no risk of recidivism. Both the defense and the probation department recommended a shorter sentence or serving the time through community supervision.

Anjan Sahni, Ellison’s attorney from Wilmer Hale, explained that his client had been deceived by Bankman-Fried, with whom she had maintained a romantic relationship. In an effort to please him, Ellison participated in the fraudulent scheme. However, after the collapse of FTX, according to her lawyer, “she regained her moral compass.”

During the hearing, Caroline Ellison spoke briefly before the reading of the sentence. With a trembling voice, she apologized to former FTX and Alameda clients, her colleagues, friends, and family. “The human brain is bad at understanding large numbers,” she said. “I can’t even begin to imagine the pain I caused.” Ellison also reflected on her criminal trajectory: “If you had told me in 2018 that I would end up pleading guilty to fraud, I would have said you were crazy.”

Under federal law, Ellison must serve at least 75% of her sentence before becoming eligible for parole. She has approximately 45 days to voluntarily surrender to the Bureau of Prisons and begin serving her sentence in Boston.