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Caroline Ellison, the former boss of the trading firm through which FTX gambled billions of dollars in customer funds, has been sentenced to two years in prison, after aiding prosecutors in the criminal case against Sam Bankman-Fried, the collapsed cryptocurrency exchange’s founder.
At a hearing in New York federal court on Tuesday, Judge Lewis Kaplan acknowledged that the 29-year-old was “genuinely remorseful” and that she was “exploited” by Bankman-Fried. However, her early and fulsome co-operation could not be a “get out of jail free card”, he added.
Ellison, who turned government witness days after FTX’s collapse in November 2022, had earlier apologised for her role in the fraud.
“To all the victims and everyone I harmed . . . I am so, so sorry,” she tearfully told the court, emphasising that she was “deeply ashamed” of her actions.
She said she heard the voice of Bankman-Fried, with whom she had an “on-again, off-again” romantic relationship, “in [her] head” while committing her crimes, adding: “I am sorry I wasn’t brave.”
The penalty for Ellison, who ran FTX-affiliated trading fund Alameda Research, contrasts sharply with the 25-year prison sentence handed to Bankman-Fried in March, which is among the longest US sentences ever for a white-collar criminal. Another former FTX executive, Ryan Salame, received a 90-month sentence in May.
FTX was one of the world’s biggest crypto exchanges when it collapsed in November 2022 following revelations that Alameda had secretly siphoned billions of dollars in customer deposits and made risky bets.
Ellison, who had pleaded guilty to fraud and money-laundering charges, was the star witness at Bankman-Fried’s trial, testifying for three days.
She walked the jury through spreadsheets, documents and private Signal chats that painted a picture of a years-long criminal conspiracy by the one-time crypto billionaire, revealing that Bankman-Fried had directed her and her ex-colleagues to steal roughly $10bn of customer deposits
She said Bankman-Fried had also directed her to create seven “alternative” balance sheets for Alameda, some of which disguised billions of dollars of kickbacks to FTX executives. A version of Alameda’s accounts that made its “assets look larger” was provided to crypto lenders.
Prosecutors had urged leniency for Ellison. In a letter to Kaplan ahead of the sentencing hearing, they highlighted how Ellison “was crucial to the government’s successful prosecution of Samuel Bankman-Fried”, and provided “substantial assistance in the investigation”.
They added Ellison was humiliated in the press as a result of her testimony and had her private conversations with a therapist divulged in Michael Lewis’s book on FTX’s collapse.
“The government cannot think of another co-operating witness in recent history who has received a greater level of attention and harassment,” they wrote.
In his remarks ahead of sentencing, Kaplan appeared to agree, saying he had “never seen [a co-operating witness] quite like Ms Ellison”.
He added that while Ellison was “a very strong person” Bankman-Fried had her “kryptonite”.
“You were vulnerable and you were exploited,” Kaplan said. “He is really sorry he got caught — your remorse is the real thing.”
A graduate of Stanford University, Ellison met Bankman-Fried at high-speed trading company Jane Street, before leaving to join Alameda with him. She was in charge of running the trading firm and had described feeling trapped and pulled into Bankman-Fried’s warped moral worldview.
While awaiting sentencing, Ellison has written a novella “set in Edwardian England and loosely based on her sister Kate’s imagined amorous exploits”, the former executive’s mother revealed in a letter to the court.
Two other former senior FTX executives who also pleaded guilty, Nishad Singh and Gary Wang, are set to be sentenced later this year.
A lawyer for Ellison did not immediately return a request for comment on the sentencing.