Caroline Ellison, former CEO of Alameda Research, was sentenced to 24 months in prison and $11 billion in forfeiture for her involvement in the collapse of FTX.
Ellison played a key role in the fraudulent activity surrounding FTX, the cryptocurrency exchange founded by Sam Bankman-Fried, and cooperated extensively with authorities following his arrest.
In December 2022, Ellison pleaded guilty to two counts of wire fraud and five counts of accessory to a crime as part of a cooperation agreement with the government. Prosecutors recommended leniency for Ellison’s “extraordinary” and “timely” cooperation. His defense team and the federal Probation Department had argued for no prison time.
During the sentencing hearing, Judge Lewis Kaplan acknowledged Ellison's significant cooperation. Kaplan said, “I've never seen anyone like Ms. Ellison,” and commended her for not shying away from self-incrimination in her testimony.
Despite his cooperation, the judge ruled that he was still liable for his role in fraudulent activity that contributed to the collapse of FTX. Ellison was a key witness who testified over three days during the trial of FTX co-founder Sam Bankman-Fried.
Prosecutors emphasized how Ellison's quick cooperation made it possible for Bankman-Fried to be promptly charged, preventing him from fleeing the Bahamas or further obstructing the investigation.
Ellison also worked with FTX’s new CEO John J. Ray to recover client assets, helping to recover debtor assets that Ray described as “valuable.” Ellison is expected to transfer most of his remaining assets to FTX debtors as part of a settlement after he satisfies his foreclosure obligations.
Ellison expressed deep remorse for his role in the fraud. He not only cooperated with prosecutors, but also apologized to his staff in a private meeting that was secretly recorded and later used as evidence against Bankman-Fried. Unlike his accomplices, Ellison did not own stock in FTX or Alameda, and prosecutors said he did not personally benefit from the wealth generated by the fraud.
Ellison’s personal life has also been deeply affected by the case, and he has faced significant public scrutiny, including leaked diary entries published by the New York Times and criticism from within the crypto community.
The prosecutor's office acknowledged that Ellison faced intense public attention, saying, “The government cannot think of another cooperating witness in recent history who has been subjected to more attention and harassment.”