TL;DR
- Caroline Ellison, former CEO of Alameda Research, has been sentenced to two years in prison for her role in the collapse of FTX.
- In addition to the sentence, he will have to forfeit approximately $11 billion.
- His testimony was crucial to the conviction of FTX founder Sam Bankman-Fried, who is serving 25 years in prison.
Caroline Ellison, former CEO of Alameda Research, has been sentenced to two years in prison for her role in the collapse of cryptocurrency platform FTX.
The scandal, which left thousands of investors and clients with multimillion-dollar losses, reached a climax in September 2024, when Ellison was sentenced.
In December 2022, she had pleaded guilty to seven charges, including wire fraud and money laundering.
However, it was her cooperation with authorities that played a decisive role in her prosecution.
During the trial, Ellison revealed critical details about the operation of Alameda Research and its direct connection to FTX client funds.
According to his testimony, Alameda had unlimited access to FTX customer deposits through a line of credit that resulted in the misappropriation of billions of dollars.
He also admitted that many of those funds were sent directly to bank accounts controlled by Alameda, allowing the company to handle users’ money without restrictions.
Throughout the process, Ellison showed deep remorse, saying he constantly thought about the harm he had caused.
Despite this, Judge Lewis Kaplan, who also presided over the Sam Bankman-Fried case, stressed that the magnitude of the fraud could not go unpunished.
While he praised Ellison’s cooperation in leading to Bankman-Fried’s 25-year prison sentence, the judge insisted that his cooperation did not mean he would escape conviction.
In addition to the prison sentence, Ellison must forfeit approximately $11 billion, representing his share of responsibility for the fraud.
Difference between Caroline Ellison and Bankman-Fried
A key point in Judge Kaplan‘s decision was the difference in Ellison’s attitude towards Sam Bankman-Fried.
While Bankman-Fried consistently denied any wrongdoing, Ellison not only accepted responsibility but provided evidence that proved essential to the conviction of the FTX founder.
Ellison’s testimony included a number of incriminating documents demonstrating mishandling of client funds, information that Bankman-Fried attempted to dismiss during her trial.
Ellison’s attorneys had asked for a lighter sentence, arguing that his cooperation should be considered in sentencing.
They even asked for him to be granted probation instead of prison time, but the judge decided that the seriousness of the case warranted a jail sentence.
However, his two-year sentence is considerably less than what he would have faced had he not cooperated.
Separately, former FTX executives Gary Wang and Nishad Singh are also scheduled to be sentenced in the coming months.
Both have cooperated with authorities, suggesting their sentences could follow a similar pattern to Ellison’s.
In March of this year, Bankman-Fried was sentenced to nearly 25 years in prison for his central role in the collapse of FTX, which has been considered one of the largest financial frauds in cryptocurrency history.
