Caroline Ellison Sentenced to 24 Months in Prison

Former Alameda Research CEO Caroline Ellison was sentenced to 24 months in prison by a federal judge on Tuesday.

In addition to the prison term, Ellison, 29, will forfeit about $11 billion and spend three years on supervised release after serving her sentence. The judge said she could serve her time in a minimum-security facility near Boston, where her family lives.

Despite the sentence, Judge Lewis A. Kaplan expressed sympathy toward Ellison, who played a key role as a witness in the government’s case against Sam Bankman-Fried, the founder and CEO of FTX, as well as Ellison’s former boyfriend. “You were vulnerable and you were exploited,” Kaplan said before delivering the sentence. “You are genuinely remorseful.” He also praised her cooperation, noting, “I’ve seen a lot of cooperators in 30 years here, I’ve never seen one quite like Miss Ellison.”

Extraordinary Cooperation

Ellison had pleaded guilty in December 2022 to two counts of wire fraud and five conspiracy counts as part of her cooperation agreement with the government. Prosecutors recommended leniency due to her “extraordinary” and “very timely” cooperation, and both her attorneys and the federal Probation Department requested no jail time.

During the sentencing hearing, Judge Kaplan reiterated his view on Ellison’s unique level of cooperation, saying, “I’ve seen a lot of cooperators in 30 years. I’ve never seen one quite like Ms. Ellison.” Her testimony against Bankman-Fried was detailed, consistent, and “very incriminating of herself.” Nonetheless, Kaplan emphasized that Ellison bore responsibility for her role in the fraud.

Ellison’s cooperation was pivotal in the government’s prosecution of Bankman-Fried. A statement from the prosecution highlighted that her quick confession enabled them to indict Bankman-Fried before he could flee the Bahamas or hinder the investigation further. Ellison also helped the new FTX CEO, John J. Ray, recover customer assets, with Ray acknowledging her “valuable” early cooperation in his statement to the court.

While Ellison’s actions demonstrated remorse, evidenced not only by her legal cooperation but also by a taped confession to her staff that she didn’t know was recorded, she has already faced personal and public repercussions. Her diaries were published by *The New York Times*, and her psychiatrist gave an interview to Michael Lewis for his book *Going Infinite*. Additionally, she has been harshly criticized within the crypto community, and her lawyers noted that she has been unable to find work and is afraid to go out in public. The prosecution corroborated this, stating, “The government cannot think of another cooperating witness in recent history who has received a greater level of attention and harassment.”

Despite these mitigating factors, Kaplan stressed the gravity of the crime. FTX was “one of the greatest financial frauds ever perpetrated in this country,” and he made clear that cooperation alone would not spare Ellison from prison. “In a case this serious, to be literally a ‘get out of jail free’ card is not something I can see my way through to,” Kaplan said before announcing the 24-month sentence. Ellison must serve at least 75% of her sentence before being eligible for parole, as is standard in federal cases.

Ellison’s testimony during Bankman-Fried’s criminal trial was instrumental in securing his conviction on all seven counts of fraud and conspiracy. Prosecutors described her testimony as a “cornerstone” of the case. Assistant U.S. Attorney Danielle Sassoon emphasized the contrast between Ellison and Bankman-Fried, highlighting Ellison’s proactive cooperation with the Department of Justice and her demonstrated remorse, in contrast to Bankman-Fried’s lack of it. While his 25-year sentence aimed to deter future crimes, Ellison’s sentence reflected her cooperation.

Ellison herself spoke briefly before her sentence, apologizing to former FTX and Alameda customers, her colleagues, friends, and family. “The human brain is bad at comprehending big numbers,” she said emotionally. “I can’t even begin to imagine the pain I’ve caused.” Reflecting on her actions, she added, “If you had told me back in 2018 that I would end up pleading guilty to fraud, I would have told you you were crazy. At each stage of the process, it became harder and harder to extricate myself…I’m sorry I wasn’t brave.”

Ellison has 45 days to voluntarily surrender to the Bureau of Prisons to begin her sentence.