Tearful Caroline Ellison gets 2 years in prison over her role in FTX
fraud
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[September 25, 2024] By
LARRY NEUMEISTER
NEW YORK (AP) — Caroline Ellison, a former top executive in Sam Bankman-Fried
’s fallen FTX cryptocurrency empire, was sentenced to two years in
prison on Tuesday after she apologized to everyone hurt by a fraud that
stole billions of dollars from investors, lenders and customers.
Ellison, 29, could have faced a much tougher sentence, but both the
judge and prosecutors said she deserved credit for talking extensively
with federal investigators, pleading guilty and ultimately testifying
against Bankman-Fried for three days at his trial last November.
U.S. District Judge Lewis A. Kaplan said Ellison's cooperation was
“very, very substantial” and “remarkable.”
But he said a prison sentence was necessary because she had participated
in what might be the “greatest financial fraud ever perpetrated in this
country and probably anywhere else” or at least close to it.
Ellison was ordered to report to prison Nov. 7.
FTX was one of the world’s most popular cryptocurrency exchanges, known
for its Superbowl TV ad and its extensive lobbying campaign in
Washington, before it collapsed in 2022.
U.S. prosecutors accused Bankman-Fried and other top executives of
looting customer accounts on the exchange to make risky investments,
make millions of dollars of illegal political donations, bribe Chinese
officials and buy luxury real estate in the Caribbean.
Ellison was chief executive at Alameda Research, a cryptocurrency hedge
fund controlled by Bankman-Fried.
“I’m deeply ashamed with what I’ve done,” she said at the sentencing
hearing, fighting through tears to say she was “so so sorry” to everyone
she had harmed directly or indirectly.
She did not speak as she left Manhattan federal court, surrounded by
lawyers.
In court Tuesday, Assistant U.S. Attorney Danielle Sassoon called for
leniency, saying Ellison's testimony was “devastating and powerful
proof” against Bankman-Fried, 32, who was found guilty of fraud and
sentenced to 25 years in prison.
Attorney Anjan Sahni asked the judge to spare his client from prison,
citing “unusual circumstances,” including her off-and-on romantic
relationship with Bankman-Fried and the damage caused when her “whole
professional and personal life came to revolve” around him.
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In this courtroom sketch, Caroline Ellison gives her sentencing
statement, Tuesday, Sept. 24, 2024, at Manhattan federal court in
New York. (Elizabeth Williams via AP)
Judge Kaplan agreed that Ellison's
willingness to work with prosecutors was extraordinary.
“I’ve seen a lot of cooperators in 30 years here. I’ve never seen
one quite like Ms. Ellison,” he said.
But he said that in such a serious case, he could not let
cooperation be a get-out-of-jail-free card, even when it was clear
that Bankman-Fried had become “your kryptonite.”
Bankman-Fried also testified at the trial, portraying himself to the
jury as inexperienced and bumbling but not a criminal. He
acknowledged making mistakes, but said he didn't defraud anyone and
wasn't aware that Alameda Research had amassed billions of dollars
in debt.
Sassoon, the prosecutor, described that testimony in court Tuesday
as “evasive, even contemptuous.”
As the business began to falter, Ellison divulged the massive fraud
to employees who worked for her even before FTX filed for
bankruptcy, trial evidence showed.
Ultimately, she also spoke extensively with criminal and civil U.S.
investigators.
Sassoon said prosecutors were impressed that Ellison did not “jump
into the lifeboat” to escape her crimes but instead spent nearly two
years fully cooperating.
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.
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