Former Crypto Executive Sentenced for Involvement in ‘Largest Financial Scam in History’

A former high-ranking executive of the fraudulent cryptocurrency empire FTX has been sentenced to two years in prison after expressing remorse for her involvement in one of the largest financial scams in history.

Caroline Ellison, 30, who served as CEO of Alameda Research and was formerly in a romantic relationship with FTX founder Sam Bankman-Fried, received the sentence after Bankman-Fried was sentenced to 25 years for defrauding customers and investors of billions in cryptocurrency.

Ellison turned against Bankman-Fried and was the star witness in the case. US District Judge Lewis A. Kaplan praised her cooperation, noting that her testimony was “very, very substantial” and consistent with the prosecution’s case.

However, he emphasized that a prison sentence was warranted due to her role in what could be the “greatest financial fraud ever perpetrated in this country and probably anywhere else,” or at least close to it.

He stated that in such a serious case, he could not allow cooperation to serve as a “get-out-of-jail-free card.”

“I’ve seen a lot of co-operators in 30 years here. I’ve never seen one quite like Ms Ellison,” he said.

She was ordered to report to prison on November 7.

Ellison pleaded guilty nearly two years ago and testified against Bankman-Fried for almost three days during the trial last November. At her sentencing, she tearfully apologized to anyone affected by the fraud, which spanned from 2017 to 2022.

“I’m deeply ashamed of what I’ve done,” she stated, expressing that she was “so, so sorry” to everyone she had harmed, both directly and indirectly.

In a court filing, prosecutors described her testimony as the “cornerstone of the trial” against Bankman-Fried, 32, who was convicted of fraud and sentenced to 25 years in prison.

In requesting a lighter sentence, Ellison’s lawyers pointed to her testimony and the trauma from her tumultuous romantic relationship with Bankman-Fried, while emphasizing that she was not attempting to avoid responsibility for her actions.

“Caroline blames no one but herself for what she did,” her lawyers stated in the filing. “She deeply regrets her role and will carry shame and remorse to her grave.”

FTX was one of the world’s leading cryptocurrency exchanges, famous for its Super Bowl TV ad and extensive lobbying efforts in Washington before its collapse in 2022.

U.S. prosecutors accused Bankman-Fried and other top executives of misappropriating customer funds to make risky investments, funnel millions in illegal political donations, bribe Chinese officials, and purchase luxury real estate in the Caribbean.

Ellison served as the CEO of Alameda Research, a cryptocurrency hedge fund controlled by Bankman-Fried, which processed some of the customer funds from FTX.

Her lawyers noted in a court filing that her professional relationship with Bankman-Fried was complicated by her romantic feelings for him.

“From the start, Mr Bankman-Fried’s behaviour was erratic and manipulative,” her lawyers said. “He initially professed strong feelings for Caroline and suggested their liaison would develop into a full relationship.

“But after a few weeks, he would ‘ghost’ Caroline without explanation, avoiding her outside of work and refusing to respond to messages that were not work-related.”