Caroline Ellison, the former CEO of Alameda Research and key witness in the FTX fraud case, is scheduled to leave federal custody on January 21, 2026.
The date appears in updated Federal Bureau of Prisons records and comes roughly 10 months earlier than her full two-year sentence.
Ellison, now 30, has been in community confinement since October 2025 after spending nearly a year at Danbury Federal Correctional Institution in Connecticut. Her early release reflects a combination of good behavior credits and her extensive cooperation with federal prosecutors investigating the FTX collapse.
The Sentencing and Cooperation
U.S. District Judge Lewis Kaplan sentenced Ellison to 24 months in prison on September 24, 2024. She was also ordered to forfeit $11 billion for her role in one of the largest financial fraud cases in U.S. history. The sentence was significantly lighter than the maximum 110 years she faced after pleading guilty to fraud and conspiracy charges in December 2022.
Judge Kaplan praised Ellison’s cooperation during sentencing, stating he had never seen a cooperating witness quite like her in his 30 years on the bench. However, he emphasized that even extraordinary cooperation could not be a “get out of jail free card” given the massive scale of the fraud.
Ellison’s testimony proved crucial in convicting FTX founder Sam Bankman-Fried, her former boss and ex-boyfriend. She spent nearly three days on the witness stand, providing detailed accounts of how billions in customer funds were misused. Prosecutors credited her with providing seven fake spreadsheets that became key evidence in the case against Bankman-Fried.
Source: @WhaleFUD
John J. Ray III, the CEO managing FTX’s bankruptcy proceedings, said in court filings that Ellison provided “valuable assistance” that helped recover hundreds of millions of dollars in assets for creditors. This cooperation played a major role in ongoing efforts to return funds to customers affected by the exchange’s collapse.
Early Release Through Good Conduct
Federal inmates can earn time off their sentences through good behavior and participation in educational or rehabilitation programs. Under federal law, prisoners can earn up to 54 days per year off their sentence for good conduct. The First Step Act of 2018 allows additional reductions through recidivism-reduction programs.
Ellison began serving her sentence on November 7, 2024. Her transfer to community confinement in October 2025 signaled that prison officials viewed her as eligible for early release. Community confinement can include home detention or placement in a residential reentry center, though the Bureau of Prisons does not disclose specific locations for privacy and security reasons.
The updated release date of January 21, 2026 represents an advancement of about four weeks from a previously reported February 20, 2026 timeline. This adjustment appears consistent with routine recalculations based on earned credits and completed programs.
Ten-Year Industry Ban
On December 19, 2025, Ellison agreed to a 10-year prohibition from serving as an officer or director of any public company or cryptocurrency exchange. This ban, part of a settlement with the Securities and Exchange Commission, will prevent her from holding leadership positions in regulated financial businesses until at least 2035.
The SEC settlement also includes permanent injunctions barring future violations of federal antifraud provisions, along with five-year conduct-based restrictions. Gary Wang and Nishad Singh, other former FTX executives who cooperated with prosecutors, received similar eight-year officer and director bans.
Following her release from custody, Ellison will remain under supervised release and must comply with additional conditions tied to her conviction. The regulatory restrictions ensure her involvement in the financial sector will be severely limited despite her freedom from prison.
The FTX Collapse Impact
FTX, once valued at $32 billion and the world’s third-largest cryptocurrency exchange, collapsed in November 2022 after reports revealed financial instability at Alameda Research. The failure triggered billions of dollars in customer losses and marked one of the most significant scandals in cryptocurrency history.
Ellison ran Alameda Research, which received much of the $8 billion in customer funds that Bankman-Fried misused from FTX. The stolen money funded Alameda’s trading operations, personal expenses, political contributions, and venture investments. During her testimony, Ellison disclosed that she altered balance sheets to hide that Alameda was borrowing approximately $10 billion from FTX customers.
The contrast between Ellison’s cooperation and Bankman-Fried’s response couldn’t be starker. While Ellison quickly returned to the United States from the Bahamas to cooperate with investigators, Bankman-Fried denied wrongdoing throughout his trial. He was convicted on all seven counts of fraud and conspiracy and sentenced to 25 years in prison in March 2024.
Bankman-Fried’s Clemency Push
Bankman-Fried is currently serving his sentence at a federal facility in California with a scheduled release date of September 2044. However, he has been actively seeking clemency from President Donald Trump through social media posts and family connections.
His parents, both Stanford Law School professors, have reportedly met with lawyers and figures in Trump’s orbit to discuss a potential pardon. Bankman-Fried has also attempted to reposition himself politically, expressing support for Republican policies and criticizing the Democratic Party despite being a major Democratic donor during the 2020 election cycle.
Industry observers remain skeptical about his chances. Unlike Ross Ulbricht, whom Trump pardoned in January 2025, Bankman-Fried lacks widespread support within the cryptocurrency community. Many in the industry view the FTX collapse as having caused lasting damage to crypto’s reputation and triggered a prolonged market downturn.
The Road Ahead for a Former Executive
Ellison’s January release will mark the end of her incarceration, but the consequences of her actions will follow her for years. Beyond the 10-year industry ban, she faces ongoing supervision and must navigate life after one of the most high-profile white collar criminal cases in recent history.
Her case demonstrates how cooperation with federal authorities can significantly reshape outcomes in large-scale financial fraud prosecutions. The sentence reduction has sparked debate about whether executives involved in massive fraud receive disproportionately lenient treatment when they cooperate with investigators.
Critics argue that the disparity between cooperating defendants like Ellison and those who fight charges undermines public confidence in the justice system. Supporters counter that cooperation incentives are essential for prosecutors to build cases against organizational leaders and recover stolen assets.
FTX creditors have seen some progress in recovering their losses, though repayments are based on cryptocurrency values at the time of bankruptcy in November 2022 rather than current market prices. This means many investors who held assets during subsequent market rallies will not benefit from those gains.
A New Chapter Begins
Caroline Ellison’s release on January 21, 2026 closes the prison chapter of the FTX saga while leaving lasting questions about accountability in the cryptocurrency industry. Her cooperation helped convict the mastermind behind one of history’s largest financial frauds and assisted in recovering assets for defrauded customers. Yet her early release, coming after serving less than half her original sentence, highlights the complex balance between punishment and incentivizing cooperation in white collar crime cases. As the crypto industry continues evolving under increased regulatory scrutiny, the FTX collapse and its legal aftermath serve as stark reminders of the consequences when trust and customer funds are betrayed.