- Caroline Ellison has been sentenced to a 2-year prison sentence and a $11B fine.
- Other top FTX executives will be sentenced in the next two months.
Caroline Ellison, former CEO of Alameda Research and ex-FTX insider, has been sentenced to two years in prison.
The court also ordered her to forfeit $11 billion despite her incredible support in the case. She was a key witness who saw her former business partner, boyfriend, and founder of defunct FTX, Sam Bankman Fried (SBF), jailed for 24 years.
Most policy watchers had expected a lesser sentence for her key role in the prosecution of her former partner.
Source: X
US District Judge Lewis Kaplan, who also delivered SBF’s sentence, praised Ellison for her cooperation. But he noted that the case was serious and she couldn’t escape scot-free.
“In a case this serious, there cannot be a get out of jail free card.”
Kaplan added that the sentence was a deterrence to other crypto fraud perpetrators.
Another chapter for FTX
As the CEO of FTX trading arm Alameda Research, Ellison was a key figure in the FTX saga.
The FTX fraud involved the misuse of customer funds (billions of dollars) from the exchange, allegedly directed to risky trading positions taken by Alameda Research.
She used customers’ funds without their consent or knowledge, deepening her involvement in the fraud. This poor risk management scheme contributed to the FTX collapse.
In December 2022, authorities charged Ellison with money laundering, fraud, and flouting campaign finance laws.
She pleaded guilty and agreed to work with authorities for a reduced jail term.
Although her 2-year sentence can’t be compared to SBF’s 24 years, some observers, like Bloomberg’s James Seyffart, didn’t expect it.
“As it went on I was thinking it might be measured in months rather than years. I would’ve taken the under on 2 years right before it was announced, to be honest.”
On top of the 2-year jail term and $11 billion fine, Ellison will serve three years of probation after the sentence. The sentence will begin on the 7th of November, 2024.
Ellison’s sentencing ends another chapter for the defunct exchange after its implosion in 2022.
The court will sentence Gary Wang, co-founder of FTX, in October 2024. Nishad Singh, the former Director of Engineering, will receive his sentence in November 2024.