Caroline Ellison, a former top executive at Sam Bankman-Fried's defunct cryptocurrency empire FTX, was sentenced to 2 years in prison on Tuesday after repeatedly apologizing to everyone harmed by a fraud that defrauded investors and customers of an organization that after gave the impression of a frontrunner in an emerging financial industry out of billions of dollars.
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U.S. District Judge Lewis A. Kaplan called Ellison's cooperation within the case “very, very extensive” and praised her testimony. He said he saw no inconsistencies with the documents presented to the jury or with things she had previously told prosecutors.
However, he said a jail sentence was vital because she had been involved in what can have been “the greatest financial fraud ever committed in this country and probably anywhere else,” or not less than near it.
He said that in such a serious case he couldn’t allow cooperation to be a free pass.
“I have seen many cooperation partners here in my 30 years. But I have never met one like Ms. Ellison,” he said.
She was ordered to report back to prison on November 7.
Ellison, 29, pleaded guilty nearly two years ago and testified against Bankman-Fried for nearly three days at a trial last November.
When the decision was handed down, she sincerely apologized to everyone who was harmed by the fraud that lasted from 2017 to 2022.
“I am deeply ashamed of what I have done,” she said, struggling through tears to inform everyone she had directly or not directly harmed that she was “so, so sorry.”
In a court filing, prosecutors said her testimony was the “cornerstone of the trial” against Bankman-Fried, 32, who was found guilty of fraud and sentenced to 25 years in prison.
Ellison's own lawyers asked the court for a lighter sentence, citing each her testimony at trial and the trauma of her off-on relationship with Bankman-Fried. But in addition they stressed that she had not tried to evade responsibility for her crimes.
“Caroline blames no one but herself for what she did,” her lawyers wrote in a court document. “She deeply regrets her role and will carry shame and remorse with her to her grave.”
FTX was considered one of the world's hottest cryptocurrency exchanges, known for its Superbowl TV industrial and extensive lobbying campaign in Washington, before it collapsed in 2022.
U.S. prosecutors accused Bankman-Fried and other top executives of plundering client accounts on the stock exchange to make dangerous investments, make hundreds of thousands of dollars in illegal political donations, bribe Chinese officials and buy luxury properties within the Caribbean.
Ellison was a managing director at Alameda Research, a cryptocurrency hedge fund controlled by Bankman-Fried, through which a few of FTX's client funds were processed.
“From the beginning, Mr. Bankman-Fried's behavior was erratic and manipulative. Initially, he confessed to strong feelings for Caroline and hinted that their connection would develop into a real relationship. However, after a few weeks, he ignored Caroline without explanation, avoided her outside of work, and refused to respond to messages that had nothing to do with work,” her lawyers said.
When the business began to fail, Ellison informed her employees in regards to the massive fraud before FTX filed for bankruptcy, her lawyers wrote.
Finally, she also spoke extensively with US investigators.
“Ellison cooperated at great personal and professional sacrifice, endured harsh media and public criticism, and endured Bankman-Fried's attempted witness tampering,” prosecutors wrote.
They said she had been open about her own wrongdoing and was “in a unique position to explain not only the what and how of Bankman-Fried's crimes, but also the why.”
“In his numerous meetings with the government, Ellison approached his cooperation with remarkable candor, remorse, and seriousness,” they wrote. “She devoted herself to an extensive document review that helped identify key supporting documents in an investigation hampered by Bankman-Fried's systematic destruction of evidence.”
It was said that her testimony within the trial was credible and convincing.
Since testifying within the Bankman-Fried trial, Ellison has devoted herself extensively to charitable work, written a novel and worked along with her parents on a sophisticated mathematics textbook for advanced highschool students, in keeping with her lawyers.
They said she also now has a healthy romantic relationship and has reconnected with highschool friends she lost touch with while working for and sometimes dating Bankman-Fried from 2017 to late 2022.
Originally published:
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