Caroline Ellison, the ex-girlfriend and top executive in Sam Bankman-Fried’s cryptocurrency empire, will be sentenced Tuesday for her role in the collapse of the crypto exchange FTX and its affiliated hedge fund Alameda Research.
Ellison’s defense team and prosecutors have asked Judge Lewis Kaplan for leniency, claiming her testimony against Bankman-Fried was key in the federal government’s case against him.
Ellison was CEO of Alameda Research, a channel through which Bankman-Fried defrauded millions of FTX investors out of nearly $8 billion in deposits. Funds from FTX were improperly used to cover billions of dollars lost by Bankman-Fried in investments and to fuel his lavish lifestyle.
Ellison was the government’s star witness in the lengthy trial and spent nearly three days on the stand, often delivering emotional testimony about how Bankman-Fried mistreated her and knowingly defrauded investors. She also described, in detail, an incriminating spreadsheet that Bankman-Fried used to mislead business partners and testified in front of a packed courtroom in Manhattan that he knew what he was doing all along.
She also told the jury that she and Bankman-Fried bribed Chinese officials with $100 million to regain access to more than a billion dollars in frozen cryptocurrency so they could continue their con to cheat investors out of their money. Alameda Research had its funds frozen on Chinese crypto exchanges OKX and Huobi.
Ellison told jurors that Bankman-Fried should be held accountable for all the crimes against him that led to FTX’s implosion.
Ellison, the daughter of Massachusetts Institute of Technology economics professors, met Bankman-Fried when she was a summer intern at Jane Street, a global proprietary trading firm, in 2015. Three years later, the duo met for coffee in San Francisco, and Bankman-Fried convinced her to join Alameda Research, his new crypto trading firm.
Over the next few years, Ellison followed Bankman-Fried to Hong Kong and then to the Bahamas, where he set up his headquarters.
The two started an on-again, off-again relationship that turned problematic on several occasions. Ellison considered leaving Alameda Research, but Bankman-Fried convinced her to stay, telling her she “was essential to the survival of the business and that he loved her,” according to a pre-sentencing memo written by her lawyers.
During one bizarre twist ahead of the trial, Bankman-Fried sent the New York Times entries from Ellison’s personal diary to show she was unstable, a move that landed him in hot water with the judge and resulted in his bail being revoked.
“A lot of what stresses me out about work is specifically failing Sam or Sam’s disapproval,” Ellison wrote in the summer of 2020. “I get easily upset when he disagrees with me or criticizes me, in a way that I don’t think I get upset if other people do the same things.”
During the trial, Bankman-Fried’s legal team painted Ellison as a deeply insecure woman who wasn’t very good at her job, failed to follow instructions, and didn’t deserve the massive salary she pulled in.
The jury on Nov. 2 found Bankman-Fried, 32, guilty of seven fraud and conspiracy counts in what prosecutors called one of the biggest financial frauds in U.S. history. He was sentenced to 25 years in prison in March. The sentence marked the fall of Bankman-Fried, who went from being a billionaire and major political donor to the biggest trophy in the U.S. authorities’ case of wrongdoing in cryptocurrency markets.
Ellison, 29, pleaded guilty to fraud soon after FTX’s collapse in November 2022. She quickly cut a deal with prosecutors to testify against Bankman-Fried.
In a court filing earlier this month, her defense lawyers asked if she could be sentenced to three years of supervised release and no prison time. They portrayed Ellison as a talented woman who was caught up in Bankman-Fried’s web and ended up aiding his illegal activity.
“She regrets her role deeply and will carry shame and remorse to her grave,” according to the memo filed by her lawyers in federal court.
In the government’s filing, prosecutors did not recommend a specific sentence for Ellison but said her cooperation with them was “not only substantial but exemplary.”
CLICK HERE TO READ MORE FROM THE WASHINGTON EXAMINER
Ellison was one of four former people in Bankman-Fried’s inner circle who pleaded guilty in the case. Gary Wang, FTX co-founder, and Nishad Singh, former FTX engineering chief, both testified at Bankman-Fried’s trial and will be sentenced in November and October.
Former FTX Digital Markets Co-Chief Ryan Salame, who did not cut a deal with the government, was sentenced to 7 1/2 years behind bars for making illegal campaign donations. He was also found guilty of operating an unlicensed money transmitter.
