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Caroline Ellison, the former boss of the trading firm through which FTX gambled away billions of dollars in client funds, has been sentenced to two years in prison after assisting prosecutors in the criminal case against Sam Bankman-Fried, the founder of the collapsed cryptocurrency exchange.
During a hearing in New York federal court on Tuesday, Judge Lewis Kaplan acknowledged that the 29-year-old was “genuinely remorseful” and that she had been “exploited” by Bankman-Fried. However, her early and abundant cooperation could not be a get-out-of-jail-free card, he added.
Ellison, who became a government witness just days after the FTX collapse in November 2022, had previously apologized for her role in the fraud.
“To all the victims and everyone I have harmed. . . I am so very sorry,” she tearfully told the court, emphasizing that she was “deeply ashamed” of her actions.
She said she heard the voice of Bankman-Fried, with whom she had an “on-again, off-again romantic relationship,” in [her] head” as she committed her crimes, adding: “I’m sorry I wasn’t brave.”
The sentence for Ellison, who headed FTX-affiliated trading fund Alameda Research, is in stark contrast to the 25-year prison sentence handed down to Bankman-Fried in March, one of the longest U.S. sentences for a white-collar criminal. Another former FTX director, Ryan Salame, was sentenced to 90 months in prison in May.
FTX was one of the world’s largest crypto exchanges when it collapsed in November 2022, following revelations that Alameda had secretly siphoned off billions of dollars in customer deposits and made risky bets.
Ellison, who had pleaded guilty to charges of fraud and money laundering, was the key witness at Bankman-Fried’s trial and testified for three days.
She led the jury through spreadsheets, documents and private Signal chats that painted a picture of a years-long criminal conspiracy by the former crypto billionaire, revealing that Bankman-Fried had instructed her and her former colleagues to transfer approximately $10 billion in steal customers. deposits.
She said Bankman-Fried also instructed her to prepare seven “alternative” balance sheets for Alameda, some of which disguised billions of dollars in kickbacks to FTX executives. A version of Alameda’s accounts that “made the assets appear larger” was provided to cryptocurrency lenders.
Prosecutors had urged leniency for Ellison. In a letter to Kaplan ahead of the sentencing hearing, they highlighted how Ellison was “critical to the government’s successful prosecution of Samuel Bankman-Fried” and “provided substantial assistance to the investigation.”
They added that Ellison was humiliated in the press as a result of her testimony and that her private conversations with a therapist were revealed in Michael Lewis’ book about the collapse of FTX.
“The government cannot think of any other cooperating witness in recent history that has received more scrutiny and intimidation,” they wrote.
In his pre-sentencing remarks, Kaplan seemed to agree, saying he had “never seen [a co-operating witness] just like Mrs. Ellison”.
He added that while Ellison was “a very strong person,” Bankman-Fried had her “kryptonite.”
“You were vulnerable and you were exploited,” Kaplan said. “He’s really sorry he got caught – your regret is true.”
Ellison, a graduate of Stanford University, met Bankman-Fried at the fast-trading firm Jane Street before leaving to join him at Alameda. She was in charge of the trading company and had described feeling trapped and drawn into Bankman-Fried’s warped moral worldview.
While awaiting sentencing, Ellison has written a novella “set in Edwardian England and loosely based on the imagined amorous exploits of her sister Kate,” the former director’s mother revealed in a letter to the court.
Two other former senior FTX executives who also pleaded guilty, Nishad Singh and Gary Wang, will be sentenced later this year.
An attorney for Ellison did not immediately return a request for comment on the sentencing.