Tearful Caroline Ellison gets 2 years in prison over her role in FTX fraud

Caroline Ellison, former CEO of Alameda Research founded by Sam Bankman-Fried, goes into a wrong car as she exits the Manhattan federal court after testifying on Tuesday, Oct. 10, 2023 in New York. (AP Photo/Eduardo Munoz Alvarez, File)

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 repeatedly to everyone hurt by a fraud that stole billions of dollars from investors, lenders and customers.

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.

He said 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.”

“I’ve seen a lot of cooperators in 30 years here. I’ve never seen one quite like Ms. Ellison,” he said.

She was ordered to report to prison Nov. 7.

Ellison, 29, pleaded guilty nearly two years ago and testified against Bankman-Fried for nearly three days at a trial last November.

At sentencing, she emotionally apologized to anyone hurt by the fraud that stretched from 2017 through 2022.

“I’m deeply ashamed with what I’ve done,” she said, 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 a court filing, prosecutors had called her testimony the “cornerstone of the trial” against Bankman-Fried, 32, who was found guilty of fraud and sentenced to 25 years in prison.

In court Tuesday, Assistant U.S. Attorney Danielle Sassoon called for leniency, saying her testimony was “devastating and powerful proof” against Bankman-Fried.

The prosecutor said Ellison’s time on the witness stand was very different from Bankman-Fried, who she said was “evasive, even contemptuous, and unable to answer questions directly” when he testified.

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.

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 that was used to process some customer funds from FTX.

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.