Caroline Ellison, the former CEO of Alameda Research, has been sentenced to two years in prison by District Judge Lewis A. Kaplan. Ellison’s involvement in the collapse of the cryptocurrency exchange FTX and its affiliated hedge fund, Alameda Research, has been at the center of one of the largest financial scandals in U.S. history.
In a court filing earlier this month, Ellison’s attorneys requested a sentence of time served and supervised release, highlighting her extensive cooperation with the investigation. Judge Kaplan recognized Ellison’s cooperation, stating that he had never seen a cooperator quite like her in his 30 years of experience. He also ruled that she must forfeit about $11 billion.
Despite Ellison’s cooperation in unraveling the FTX scandal, Judge Kaplan still placed significant blame on her in his ruling. FTX collapsed in November 2022 amid accusations of fraud and mismanagement directed at both the exchange and Alameda Research.
Caroline Ellison played a significant role in the collapse of FTX and its affiliated entities. As co-CEO of Alameda, she engaged in questionable financial practices, including the alleged misuse of FTX customer funds to cover Alameda’s liabilities. Ellison admitted to participating in a scheme to misuse billions of dollars in FTX customer funds to cover Alameda Research’s losses, finance risky investments, and make personal loans to FTX executives.
In July, it was reported that Ellison recorded her doubts about her suitability to run the fund on private Google documents. She also dated Sam Bankman-Fried for a time.
Ellison cooperated with prosecutors throughout the trials, testifying against Bankman-Fried to avoid a potential 110-year prison sentence. Her testimony was crucial in convicting Bankman-Fried by detailing the misappropriation of funds and deceptive practices at FTX.
In addition to Ellison’s sentencing, a former FTX executive, Ryan Salame, was sentenced to 7.5 years in prison earlier this year for his involvement in an unlawful political influence campaign and operating an unlicensed money-transmitting business. Prosecutors emphasized Salame’s role in undermining public trust in elections and financial integrity despite his legal team’s request for a lighter sentence.
The fate of Caroline Ellison has garnered attention from legal experts and the crypto community. Traders on platforms like Polymarket speculated on whether she would avoid prison time. Ellison’s cooperation in the case against Sam Bankman-Fried has been praised, but Judge Kaplan’s ruling reflects the significant blame placed on her for her role in the FTX scandal.