Caroline Ellison, former FTX executive, sentenced to 24 months in prison (CBS News, 2024)

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A news article by Aimee Picchi on CBS News MoneyWatch, updated September 24, 2024, "Caroline Ellison, former FTX executive, sentenced to 24 months in prison". The article reports that Caroline Ellison, a former top executive at Sam Bankman-Fried's FTX cryptocurrency exchange, was sentenced Tuesday to 24 months for her role in a multibillion-dollar fraud involving the bankrupt company. It states that U.S. District Judge Lewis A. Kaplan called Ellison's cooperation "very, very substantial" but said a prison sentence was warranted, and that Ellison was ordered to report to prison Nov. 7. It reports, citing Bloomberg News, that Ellison can serve the sentence at a minimum-security facility and will have to forfeit $11 billion. It states that Bankman-Fried is serving a 25-year sentence.

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MoneyWatch

Caroline Ellison, former FTX executive, sentenced to 24 months in prison

By

Aimee Picchi

Associate Managing Editor, MoneyWatch

Aimee Picchi is the associate managing editor for CBS MoneyWatch, where she covers business and personal finance. She previously worked at Bloomberg News and has written for national news outlets including USA Today and Consumer Reports.

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Aimee Picchi

Updated on: September 24, 2024 / 4:47 PM EDT / CBS News

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Caroline Ellison, a former top executive at Sam Bankman-Fried's FTX cryptocurrency exchange, was sentenced Tuesday to 24 months for her role in a multibillion-dollar fraud involving the bankrupt company.

Ellison, 29, pleaded guilty nearly two years ago and testified against Bankman-Fried for nearly three days at his trial on multiple fraud charges last November. In her emotional testimony, she blamed Bankman-Fried for justifying FTX's illegal conduct and said she had felt relief when the company collapsed because she "didn't have to lie anymore."

U.S. District Judge Lewis A. Kaplan said Ellison's cooperation in the case was "very, very substantial" and praised her testimony, saying he saw no inconsistencies with documents shown to the jury or things she had previously told prosecutors.

But Kaplan said a prison sentence was warranted because Ellison had participated in what he said might be the "greatest financial fraud ever perpetrated in this country." As a result, her cooperation with prosecutors should not serve as a get-out-of-jail-free card, Kaplan said.

"I've seen a lot of cooperators in 30 years here. I've never seen one quite like Ms. Ellison," the judge said.

"Vulnerable" Ellison

In handing down his sentence, Kaplan also described Ellison as "vulnerable" and "exploited," according to Bloomberg News.

She was ordered to report to prison Nov. 7. Ellison can serve the sentence at a minimum-security facility, and she'll have to forfeit $11 billion, Bloomberg News reported.

Ellison was chief executive at Alameda Research, a cryptocurrency hedge fund controlled by Bankman-Fried that was used to process FTX customer funds. In her testimony, she disclosed that she altered balance sheets to try to hide that Alameda was borrowing about $10 billion from FTX customers in June 2022, when the crypto market was plummeting and some lenders were demanding that Alameda return their money.

Caroline Ellison, former CEO of Alameda Research and FTX executie, leaves court in New York, New York, on Thursday, Oct. 12, 2023. Stephanie Keith/Bloomberg via Getty Images

Prior to FTX's collapse, Bankman-Fried had became a billionaire through cryptocurrencies, earning a Fortune magazine cover that asked if he was the next Warren Buffett. But after FTX collapsed into bankruptcy, a jury concluded that some of FTX investors' money had been improperly spent on real estate, investments, celebrity endorsements, political contributions and lavish lifestyles.

In asking the court leniency, Ellison's own lawyers cited both her testimony and the trauma of her off-and-on romantic relationship with Bankman-Fried, though they also stressed that she wasn't trying to evade responsibility for her crimes.

"Caroline blames no one but herself for what she did," her lawyers wrote in a court filing. "She regrets her role deeply and will carry shame and remorse to her grave."

Bankman-Fried is serving a 25-year sentence after he was sentenced in March in what a prosecutor once described as one of the largest financial frauds in U.S. history.

Life after FTX

Since testifying at Bankman-Fried's trial, Ellison has engaged in extensive charity work, written a novel and worked with her parents on a math enrichment textbook for advanced high school students, according to her lawyers.

They said she also now has a healthy romantic relationship and has reconnected with high school friends she had lost touch with while she worked for and sometimes dated Bankman-Fried from 2017 until late 2022.

Edited by Alain Sherter

The Associated Press contributed to this report.

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