[NEWS] Former Alameda Research CEO Sentenced to Two Years in Prison for FTX Fraud

Caroline Ellison, a former executive of the cryptocurrency exchange FTX led by Sam Bankman-Fried, was sentenced to two years in prison on the 24th for fraud involving the theft of billions of dollars from investors, lenders, and customers.

Ellison could have faced a heavier sentence, but the judge, after extensive discussions with federal investigators and in recognition of her guilty plea, acknowledged her cooperation during the three days of testimony she gave against Sam Bankman-Fried in last November's trial. Both the judge and prosecutors evaluated her cooperation positively.

U.S. District Judge Lewis A. Kaplan stated that Ellison’s cooperation was "very substantial" and "noteworthy."

However, the judge also noted that because Ellison had been involved in "one of the largest, if not the largest, financial frauds in the history of this country, or perhaps any country," a prison sentence was still appropriate. Ellison has been ordered to report to prison on November 7.

Before its collapse in November 2022, FTX was known for its Super Bowl commercials and extensive lobbying efforts in Washington. At its peak, FTX was the second-largest cryptocurrency exchange in the world, trailing only Binance.

U.S. prosecutors accused Bankman-Fried and other executives of misappropriating funds from customer accounts at the exchange, making risky investments, engaging in illegal political donations worth millions of dollars, bribing Chinese officials, and purchasing luxury real estate in the Caribbean.

Ellison tearfully apologized during the sentencing hearing.

As the CEO of Alameda Research, a cryptocurrency hedge fund effectively controlled by Bankman-Fried, Ellison said, "I am deeply ashamed of what I did" and expressed her sincere apologies to everyone she had harmed, both directly and indirectly.

In the courtroom on the 24th, Assistant U.S. Attorney Danielle Sassoon urged leniency for Ellison, noting that her testimony had provided "crucial and compelling evidence" against Bankman-Fried, who was convicted of fraud and sentenced to 25 years in prison.

Ellison's lawyer, Anjan Sahni, managing partner at the law firm Wilmer Hale, highlighted the "extraordinary circumstances" of the case, pointing to the intermittent romantic relationship between Ellison and Bankman-Fried and how "her entire professional and personal life" revolved around him, as he pleaded for the judge to release her from prison.

According to trial evidence, when FTX’s business began to falter, Ellison had already informed employees about large-scale fraudulent activities before the company’s collapse.

Judge Kaplan acknowledged Ellison’s exceptional willingness to cooperate with prosecutors, noting that in his 30 years of experience, he had "never seen a cooperator like Ms. Ellison." However, he also stated that cooperation alone cannot be used as a free pass in such a serious case.

Bankman-Fried testified in court, telling jurors that while he was inexperienced and clumsy, he was not a criminal. He admitted to making mistakes but insisted that he had never tried to deceive anyone and claimed he was unaware of the billions of dollars in losses at Alameda Research.

Prosecutor Sassoon criticized Bankman-Fried's testimony as "evasive and even contemptuous."

Reference: BBC
Image: Shutterstock

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