Sam Bankman-Fried’s ex Caroline Ellison has been sentenced to two years in jail

Caroline Ellison, the former CEO of Alameda Research and ex-girlfriend of disgraced FTX founder Sam Bankman-Fried (also known as SBF), has been sentenced to 24 months years in prison and must forfeit about $11 billion.

The sentence was handed down by Judge Lewis Kaplan, of the U.S. District Court for the Southern District of New York in lower Manhattan, who found Ellison guilty of financial fraud. The surrender date should be set on or after Nov. 7.

Ellison, 29, was the prosecution’s star witness against SBF, the disgraced cryptocurrency executive. SBF was convicted of fraud and theft of about $8 billion in customer funds in the spectacular collapse of the crypto exchange FTX. He was sentenced to 25 years in prison in March.

Ellison has agreed to give up all the money she gained from FTX. Her lawyer said she would never profit from her role in this crime.

SBF was Ellison’s ‘kryptonite,’ judge said

While Ellison requested no jail time, the sentencing guidelines recommended a 110-year prison term for Ellison, the same as for SBF. However, Kaplan expressed concern that the guidelines could be excessively severe and suggested Ellison deserves a more lenient punishment. He commended her for being consistent in her testimony, in contrast with Bankman-Fried, who didn’t cooperate with an investigation.

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

Even the prosecutor, Danielle Sassoon, agreed Ellison deserved a sentence substantially below the guidelines because she cooperated with the government in the investigation.

Kaplan said Ellison was vulnerable and was exploited. “Mr. Bankman-Fried had your kryptonite,” Kaplan said.

‘I’m sorry,’ Ellison said

Ellison pleaded guilty to seven counts, including conspiracy to commit wire fraud, conspiracy to commit commodities fraud, conspiracy to commit securities fraud, and conspiracy to commit money laundering. Ellison, a Stanford University graduate and the daughter of MIT professors, admitted she participated in the fraud at FTX.

She addressed the court Tuesday, saying, “I want to start by saying how sorry I am.” She apologized to lenders, investors, and victims who lost money due to her actions, as well as to her family, friends, and everyone she lied to. She said she was sorry for not being brave enough.

“I participated in a criminal conspiracy that ultimately stole billions of dollars from people who entrusted their money with us,” she said.

“Not a day goes by that I don’t think about all of the people I hurt.”

Ellison tried to fix things at FTX

Ellison’s attorney, Anjan Sahni, told Kaplan that Ellison was just 24 when the fraud at Alameda Research — a sister hedge fund to FTX — began under Bankman-Fried’s leadership. According to Sahni, Ellison became isolated from her family and friends, and although she knew she should leave, she couldn’t break free from Bankman-Fried’s influence. She had hoped to fix the situation but eventually realized it was doomed to end in disaster.

“The question that he and she have wrestled with is the why. Why didn’t she walk away before it was too late?” the lawyer told Kaplan. “Caroline has never minimized her role for these crimes.”

What did Ellison tell the court?

Ellison’s testimony against SBF has been pivotal in determining how he committed the biggest financial fraud in history. She accused him of instructing her to hide Alameda’s obligations to FTX by making misleading balance sheets. He was also accused of choosing risky investments — despite knowing his customers’ funds would be depleted.

SBF and Ellison’s romantic relationship complicated the case. In her testimony, she said that her former boss and boyfriend corrupted her values and that they both lied for years.

When the company failed, she said she “felt this sense of relief that I didn’t have to lie anymore and that I could start taking responsibility, even though I felt indescribably bad.”

What’s next for other SBF buddies?

Ellison’s jail sentence suggests Bankman-Fried’s associates Gary Wang and Nishad Singh may also receive jail time. Singh will receive his sentence Oct. 30, while Wang is set to receive his sentence Nov. 20.

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