Caroline Ellison, the former girlfriend, employee and co-conspirator of convicted FTX founder and CEO Sam Bankman-Fried, was sentenced to 24 months in prison on Tuesday for her role in defrauding investors and customers of the cryptocurrency platform ahead of its multi-billion-dollar collapse.
U.S. District Judge Lewis Kaplan handed Ellison the two year term behind bars, along with 3 years of supervision. Ellison was also ordered to forfeit around $7.11 billion.
Ellison, who was the CEO of FTX sister company Alameda Research when FTX went bankrupt in Nov. 2022, previously pleaded guilty to two counts of wire fraud and five conspiracy charges and agreed to cooperate with prosecutors.
She was the government’s star witness in its trial against Bankman-Fried, who was convicted earlier this year to 25 years in prison after being convicted last November on similar charges. Bankman-Fried maintains his innocence, and is appealing both his conviction and sentence.
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Ellison faced as much as 110 years in prison, but prosecutors had urged the judge to show leniency, even referring to her cooperation as “exemplary.” Her defense team asked the judge for no jail time and a supervised release of three years, arguing that she was pivotal to Bankman-Fried’s conviction, she was not the lead orchestrator of the crime and has repented.
Ryan Salame, another former high-ranking official at FTX and its sister firm Alameda Research that cooperated with officials, was sentenced earlier this year to seven and a half years in prison after pleading guilty to the federal charges against him.
During Bankman-Fried’s criminal trial, Ellison testified that she and other executives committed crimes at FTX and Alameda. Ellison blamed her part in the alleged fraud on Bankman-Fried.
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Ellison admitted that billions of dollars in FTX customers’ funds were funneled to Alameda to be used for the hedge fund’s investments and to repay its debts. The former Alameda CEO also admitted to sending doctored balance sheets to lenders at Bankman-Fried’s direction, which she said made the hedge fund appear less risky than it truly was.
The collapse of FTX has been compared to Enron. The crypto exchange had merged assets with Alameda Research amid cash problems, leading waves of customers to withdraw funds. Bankman-Fried was indicted the next month.
FTX bankruptcy proceedings indicate victims will receive all their money back, though at the value as of Nov. 2022, during crypto winter.
FOX Business’ Kelly O’Grady and Suzanne O’Halloran contributed to this report.
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