FTX’s Caroline Ellison Begins Her Two Year Prison Sentence

Caroline Ellison, the former girlfriend of Sam Bankman-Fried, and former cryptocurrency executive at FTX, has begun her two year prison sentence.

According to CNBC, Caroline Ellison (the star witness in the prosecution of FTX founder Sam Bankman-Fried in the largest fraud cases in the United States) this week reported to a low-security federal prison in the suburbs of Connecticut.

Ellison in September had been sentenced to two years in prison for her role in Sam Bankman-Fried’s theft of $8 billion in customer funds from the now-bankrupt FTX exchange.

Fraud trial

Ellison had also ordered to forfeit $11 billion, after she ran the Alameda Research hedge fund affiliated with FTX.

FTX had collapsed into Chapter 11 bankruptcy protection back in November 2022, when a multi-billion dollar hole was found in its balance sheet.

After a notable trial in the United States, Sam Bankman-Fried was eventually sentenced to 25 years in prison.

He is currently appealing the verdict and sentence.

Caroline Ellison had pleaded guilty in December 2022 to seven felony counts of fraud and conspiracy, and she agreed to co-operate with the US investigation and indeed testified as a prosecution witness.

Two other executives and former close associates also testified as prosecution witnesses at the trial that Bankman-Fried had directed them to use FTX customer funds to plug losses at Alameda Research.

No get out of jail card

Ellison had pleaded not to send her to prison, and her lawyers had told US District Judge Lewis Kaplan in Manhattan that Ellison deserved leniency for helping prosecutors build a successful criminal case against Bankman-Fried.

US prosecutors had sought leniency as well.

But at the sentencing hearing in Manhattan federal court, Judge Kaplan said he recognised her extensive cooperation with prosecutors, but was not comfortable with remorse and co-operation being a “get out of jail free card” in a case so serious.

The crimes to which she pleaded guilty carried a maximum sentence of 110 years in prison, and Judge Kaplan told Ellison she was “gravely culpable in this fraud,” though he said her “remarkable co-operation” represented a “fundamental distinction” between her and Bankman-Fried.

Judge Kaplan recommended that Ellison be incarcerated in a minimum-security prison and begin serving her sentence in November.

This was despite the Federal Probation Department, which had recommended that Judge Lewis Kaplan sentence Ellison to three years of supervised release, with no time behind bars.

CNBC, citing a spokesman for the Bureau of Prisons, confirmed that Caroline Ellison had reported to prison this week.

Other executives

So with Sam Bankman-Fried and Caroline Ellison now behind bars, what of the other FTX executives?

Nishad Singh, the former engineering director at FTX, had pleaded guilty to six felony counts of fraud and conspiracy, but on 30 October was spared prison after Judge Kaplan said his involvement “was much more limited than, certainly, Bankman-Fried and Ellison”.

Gary Wang the former chief technology officer at FTX, faces his sentencing hearing on 20 November.

Meanwhile Ryan Salame, a former FTX executive who did not co-operate with prosecutors, was sentenced to 7-1/2 years in prison in May after pleading guilty to making unlawful campaign donations to causes supported by Bankman-Fried.