Caroline Ellison, Former FTX Executive and Ex-Girlfriend of Sam Bankman-Fried, Sentenced to 2 Years in Prison

Caroline Ellison, whose testimony helped convict her former boss and ex-boyfriend, disgraced cryptocurrency tycoon Sam Bankman-Fried, was sentenced Tuesday to two years in prison for fraud and conspiracy.

Ellison was sentenced by Judge Lewis A. Kaplan to 24 months in prison and an $11 billion penalty for her involvement in the collapse of Bankman-Fried’s cryptocurrency exchange, FTX. She faced a maximum sentence of about 110 years.

Ellison, 29, accepted a plea deal to conspiracy and financial fraud charges in December 2022, a month after FTX went bankrupt. She testified against Bankman-Fried for nearly three days at her trial last November.

Bankman-Fried was convicted of all seven counts of felony fraud and sentenced to 25 years in prison. Prosecutors said in a court filing that her testimony was the “cornerstone of the trial.”

Ellison’s attorneys had asked for her to be sentenced to prison and supervised release, citing her cooperation. In a court document filed earlier this month, her lawyers said she promptly returned to the United States in 2022 from FTX’s headquarters in the Bahamas and has voluntarily cooperated with the U.S. attorney’s office.

She willingly worked with financial regulators to help them figure out what went wrong at FTX and at Alameda Research, FTX’s sister hedge fund run by Ellison, the document says.

Federal prosecutors say Alameda Research received much of the $8 billion in FTX customer funds that Bankman-Fried looted through an unlimited line of credit from FTX. It then used the money for personal expenses, trading, Alameda debt payments and political contributions, Ellison and other witnesses said.

Asking for a sentence commensurate with time served, defense attorney Anjan Sahni said Ellison had “regained his moral compass” and “deeply regretted” not leaving Bankman-Fried’s orbit.

Ellison addressed the court, reading a statement in which she apologized to those she had hurt and expressed shame for her role in the saga.

But Kaplan, describing the FTX collapse as possibly the largest financial fraud uncovered in U.S. history, said he could not accept a “literal get-out-of-jail-free card” for the defendant.

He ordered him to surrender to authorities on or after November 7.

In the 67-page court document filed Sept. 10, FTX CEO John Ray, who guided the cryptocurrency company through bankruptcy proceedings, said Ellison’s cooperation with the government was “invaluable” in helping his team preserve and protect “hundreds of millions of dollars” in assets.

Her lawyers wrote that Bankman-Fried had forced her into a kind of isolation that had resulted in a “warping” of her moral compass. They said that under his orders, Ellison had helped “steal billions” while living “in terror, knowing that a disastrous collapse was likely but fearing that breaking free from her bonds would only hasten that collapse.” Her professional relationship with Bankman-Fried was further complicated by their on-and-off romantic relationship.

Ellison’s lawyers said Bankman-Fried convinced her to stay by telling her he loved her and that she was essential to the company’s survival “while perversely demonstrating that he considered her not good enough to be seen in public with him at high-profile events.”

Before its collapse in 2022, FTX was one of the most popular cryptocurrency exchanges in the world and was known for its extensive lobbying campaign in Washington and its Super Bowl ad.

Bankman-Fried and other top executives have been accused of plundering the exchange’s customer accounts to make risky investments, buying luxury real estate in the Caribbean, making millions of dollars in illegal political donations and bribing Chinese officials.

Ryan Salame, a former Bankman-Fried executive, was the first member of FTX’s management team to be convicted. In May, a judge sentenced him to seven and a half years in prison and ordered him to pay more than $6 million in forfeiture and more than $5 million in restitution.

Two other former leaders, Nishad Singh and Gary Wang, will be sentenced in October and November respectively.