Former Alameda CEO Caroline Ellison sentenced to 2 years for FTX collapse

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Former Alameda CEO Caroline Ellison sentenced to 2 years for FTX collapse
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Caroline Ellison, former co-CEO of Alameda Research, was sentenced to two years in prison on Tuesday (24) for her role in the collapse of cryptocurrency exchange FTX. The brokerage’s downfall resulted in billion-dollar losses for consumer investors.

Ellison, who also had a relationship with former FTX CEO Sam Bankman-Fried, pleaded guilty in December 2022 to multiple charges including conspiracy to commit wire fraud and money laundering.

Alameda Research, founded by Bankman-Fried, had close ties to FTX. As such, the companies’ joint efforts were one of the factors that led to the exchange’s bankruptcy. As part of his sentence, Ellison will also have to pay back approximately $11 billion and will serve his sentence in a “minimum security” facility, according to Bloomberg.

During the hearing, Ellison addressed the court, expressing regret for the losses caused.

Caroline Ellison Hearing

“Not a day goes by that I don’t think about all the people I’ve hurt,” he said.

According to the court ruling, she cooperated with the government and testified against Bankman-Fried at her criminal trial. During her testimony, she claimed that it was the former FTX CEO who directed her to commit the crimes that led to the company’s downfall.

Ellison revealed that Alameda had direct access to FTX’s customer deposits through an unlimited line of credit. In addition, the company used a so-called “fiat@” bank account to receive these funds. He also admitted to submitting false financial statements to banks at Bankman-Fried’s direction, disguising the risks of Alameda’s financial position.

Judge Lewis Kaplan, who sentenced Bankman-Fried, noted that the main difference between the two defendants was Ellison’s cooperation. Bankman-Fried, meanwhile, denied any involvement in the criminal acts.

Ellison’s attorneys had requested that the prison sentence be commuted to a term of supervised release. They cited his cooperation with the government as a mitigating factor. The U.S. Probation and Parole Department recommended a sentence of time served plus three years of supervised release.

Braden Perry, a former federal prosecutor and partner at the law firm Kennyhertz Perry, said Ellison’s cooperation was likely the main factor in the recommendation for a lesser sentence. However, Perry stressed that the judge is not required to follow that recommendation, and can impose a harsher sentence if he deems it appropriate.

Former Alameda CEO Caroline Ellison sentenced to 2 years for FTX collapse

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Former Alameda CEO Caroline Ellison sentenced to 2 years for FTX collapse

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Former Alameda CEO Caroline Ellison sentenced to 2 years for FTX collapse

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