Former Alameda CEO Caroline Ellison was sentenced to two years in prison for her role in the FTX fraud

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Caroline Ellison, the former CEO of Alameda Research, was sentenced Tuesday to 24 months in prison by a Manhattan court for her role in the multibillion-dollar crypto exchange fraud FTX. Judge Lewis Kaplan, who previously sentenced Sam Bankman-Fried to 25 years, acknowledged Ellison’s cooperation but emphasized the seriousness of the crimes committed.

Ellison pleaded guilty to seven charges related to the collapse of FTX in late 2022, admitting that he conspired with Bankman-Fried to embezzle billions in customer deposits. Despite entering into a plea agreement with the US Department of Justice and providing full cooperation, the court determined that the scale of the fraud warranted incarceration.

“I’ve seen a lot of contributors in 30 years. I’ve never seen one like Ms. Ellison,” Kaplan said, later adding that Ellison was “vulnerable” and “exploited” during the ordeal.

Her testimony proved pivotal in Bankman-Fried’s November 2023 trial, providing critical evidence that led to his conviction on all seven counts of fraud. In April 2024, Bankman-Fried received a 25-year prison sentence for orchestrating the scheme.

Ellison’s defense team asked for leniency, asking for three years of supervised release without prison time. They highlighted her acceptance of responsibility, deep remorse, and portrayal as a figure under the influence of Bankman-Fried. Attorneys described Ellison as living in a social “bubble” centered around her ex-partner, noting her repeated attempts to leave Alameda.

Despite the federal Probation Department’s recommendation for no jail time and prosecutors’ support for leniency, Judge Kaplan ruled that the scale of the fraud warranted a prison sentence. The judge said that while Ellison’s cooperation was commendable, it did not absolve her of responsibility for her actions in the years-long scheme.

When Ellison begins her prison sentence, her former associate challenges her conviction. Bankman-Fried’s attorneys filed an appeal earlier this month, alleging bias on the part of the trial judge. They argue that limitations on presenting evidence and mounting an effective defense led to an unfair trial.

The appeal claims that the judge’s rulings prevented Bankman-Fried from claiming that FTX users could recover funds through bankruptcy proceedings, creating a false narrative of permanent losses. His legal team is seeking to overturn the conviction and is requesting new proceedings before a different judge.

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