FTX fraud: Caroline Ellison jailed for two years

Caroline Ellison has been sentenced to two years in jail for her role in the multibillion-dollar collapse of FTX, the crypto exchange led by her former boyfriend Sam Bankman-Fried.
Customers of FTX and Alameda Research, its sister company where Ellison was chief executive, were defrauded out of an estimated $8 billion.
Ellison, 29, pleaded guilty to seven felony counts of fraud and conspiracy. The crimes carry a maximum sentence of 110 years in prison.
Lawyers for Ellison had argued that she should be spared jail after she acted as a co-operating witness, helping prosecutors with their case against Bankman-Fried, 32.
However, at a sentencing hearing in Manhattan federal court on Tuesday, US District Judge Lewis Kaplan said that he was not comfortable with remorse and co-operation being a “get out of jail free card” in a case so serious.
During the hearing, Kaplan told Ellison she was “gravely culpable in this fraud — there is no doubt about it”. But he said that her “remarkable co-operation” represented a “fundamental distinction” between her and Bankman-Fried.
“There’s no way you’re ever going to do something like this again, I am persuaded,” the judge told Ellison. “But here’s the thing: this was, if not the very greatest financial fraud ever perpetrated in this country or anywhere else, close to it.”
Ellison testified against Bankman-Fried, the former billionaire who she said did not prioritise following rules such as “don’t lie” or “don’t steal” over what he considered to be the greatest amount of good for the greatest number of people.
The empire started to unravel when Coindesk, a crypto trade publication, published a leaked balance sheet in November 2022 showing that Alameda Research and FTX had an “unusually close” relationship.
Later that month, FTX was declared bankrupt after it emerged that Bankman-Fried had siphoned off $8 billion of customer deposits to make risky investments in Alameda.
At Bankman-Fried’s trial, Ellison and two other former colleagues testified that the former billionaire had directed them to use FTX customer funds to plug losses at Alameda.
Bankman-Fried is serving a 25-year prison sentence after he was convicted of fraud and other charges last year.
Kaplan said that prison time was warranted for Ellison despite her co-operation with prosecutors.
“I’ve seen a lot of co-operators in 30 years here (as a judge). I’ve never seen one quite like Ms Ellison,” he said. “I don’t remember a single time when she was caught with the slightest error of fact, the slightest inconsistency.”
Ellison earlier addressed the judge, speaking from a prepared statement. “Not a day goes by when I don’t think about all the people I hurt,” said Ellison, a Stanford University graduate whose parents and two sisters were present in court. “My brain can’t even truly comprehend the scale of the harms I’ve caused. That doesn’t mean I don’t try.”
Nishad Singh, former director of engineering at FTX, and Gary Wang, former chief technology officer, who also co-operated with prosecutors, are scheduled to be sentenced on October 30 and November 20, respectively.