Caroline Ellison, former CEO of Alameda Research and key witness in the FTX case, reported to a low-security prison in Connecticut on Thursday to start her two-year sentence, CNBC reported.
This follows her cooperation with federal prosecutors that contributed to the conviction of FTX founder Sam Bankman-Fried. The fraud involving FTX, once valued at $32 billion, has been deemed one of the most significant financial crimes in US history.
Caroline Ellison, Sam Bankman-Fried’s ex-lover, begins 2-year prison sentence trib.al/M5dEeT2
Ellison, who played a pivotal role in exposing the inner workings of FTX’s collapse, was sentenced in September and ordered to forfeit $11 billion.
Despite a recommendation from the federal Probation Department for supervised release without incarceration and pleas from her defense for a non-custodial sentence, US District Judge Lewis Kaplan determined that prison time was necessary to deter future financial misconduct.
Kaplan acknowledged Ellison’s remorse and extensive cooperation but emphasized that consequences were needed for such large-scale fraud.
Caroline Ellison’s involvement in FTX fraud
Ellison’s involvement with FTX extended beyond her professional role.
As head of Alameda Research, she oversaw the firm that benefited from $8 billion in misappropriated customer funds funneled from FTX.
These funds supported Alameda’s trading activities and other ventures, deepening the extent of the fraud. Her relationship with Bankman-Fried further complicated her position in the case.
In December 2022, Ellison accepted a plea deal and admitted to conspiracy and financial fraud charges after FTX filed for bankruptcy in November.
During sentencing, she expressed deep regret, at times becoming emotional as she apologized for her actions and for failing to distance herself from the company and Bankman-Fried.
Judge Kaplan, who presided over the case in Manhattan, called the FTX collapse the most significant financial fraud ever seen in the US He rejected leniency beyond Ellison’s cooperation, noting, “A literal get-out-of-jail-free card I can’t agree to.”
The sentencing of Ellison comes just weeks after former FTX executive Nishad Singh was given time served and three years of supervised release.
Singh was the fourth former employee to face sentencing in connection to the FTX scandal.
Bankman-Fried, who opted to go to trial rather than cooperate, was convicted on all seven counts of fraud and sentenced to 25 years in prison.
He, like Ellison, was ordered to forfeit $11 billion.
Both faced potential maximum sentences of up to 110 years for their roles in the fraudulent operation that led to the exchange’s collapse.
Ellison’s sentencing marks another significant chapter in the aftermath of the FTX debacle, underscoring the consequences faced by key players in one of the most infamous financial scandals of modern times.
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