Caroline Ellison, former CEO of Alameda Research and insider at FTX, has been sentenced to two years in prison and a fine of $11 billion.
Other FTX executives will be sentenced within the next two months.
Caroline Ellison, a key witness who witnessed her former business partner, boyfriend, and founder of the now-defunct FTX, Sam Bankman-Fried (SBF), being sentenced to 24 years in prison.
Although she provided significant support in this case, the court still ordered her to forfeit $11 billion.
Most policy observers had anticipated a lighter sentence for her due to her crucial role in the prosecution of her former partner.
US District Judge Lewis Kaplan also praised Ellison’s cooperation and applauded SBF’s sentence. However, he noted that the case is serious and she cannot escape punishment in Scotland.
“In such a serious case, there can be no get-out-of-jail-free card.”
Kaplan added that this sentence serves as a deterrent to other cryptocurrency fraudsters.
Another chapter for FTX
As the CEO of Alameda Research, the trading division of FTX, Ellison was a key figure in FTX’s legend.
FTX fraud
Involved in the misuse of customers’ funds (billions of dollars) on the exchange, which were allegedly used by Alameda Research for risky trading positions.
She used customers’ funds without their consent or knowledge, deepening her involvement in fraudulent activities. This poor risk management scheme led to the collapse of FTX.
In December 2022, authorities charged Ellison with money laundering, fraud, and contempt of campaign finance laws.
She pleaded guilty and agreed to cooperate with authorities to reduce her sentence.
Although her two-year sentence cannot be compared to SBF’s 24-year sentence, some observers, such as James Seyffart from Bloomberg, did not expect it.
“Over time, I’ve been thinking it might be measured in months rather than years. To be honest, I’ve underestimated it for the past two years before it was announced.”
In addition to the two-year prison term and $11 billion fine, Ellison will also be subject to three years of probation following the sentencing, starting on the 7th of November, 2024.
Ellison’s sentence marks another chapter for the bankrupt exchange in 2022.
The court will deliver a verdict on FTX co-founder Gary Wang in October 2024. Former Chief Engineer Nishad Singh will be sentenced in November 2024.
