Former cryptocurrency executive Caroline Ellison will receive her sentencing on Tuesday for her role in helping her former boyfriend, Sam Bankman-Fried, steal approximately $8 billion in customer funds from the now-bankrupt FTX exchange. Ellison, who previously pleaded guilty to seven felony counts of fraud and conspiracy, testified as a key witness in the prosecution of Bankman-Fried, who is currently serving a 25-year prison sentence following his conviction for fraud and other charges last year after FTX’s collapse in November 2022.
At her 3 p.m. EDT (1900 GMT) sentencing hearing before U.S. District Judge Lewis Kaplan in Manhattan, Ellison will find out the extent of leniency she may receive for cooperating with prosecutors. Although the crimes to which she pleaded guilty carry a maximum sentence of 110 years in prison, Ellison, 29, is expected to receive a much lighter sentence than Bankman-Fried. Her legal team has argued for no prison time due to her cooperation, and the U.S. Attorney’s office in Manhattan has also urged Judge Kaplan to be lenient, citing her “extraordinary” assistance and remorse.
Prosecutors noted that while Bankman-Fried denied responsibility as FTX unraveled, Ellison expressed relief that the fraud had been exposed and took accountability for her actions. According to prosecutors, Ellison met with them about 20 times, helping them piece together FTX’s collapse and build a case against Bankman-Fried.
Bankman-Fried’s downfall marked one of the largest financial frauds in U.S. history. He had risen to prominence during the COVID-19 pandemic as cryptocurrency prices surged, reaching a peak net worth of $26 billion by October 2021, according to Forbes. He also gained recognition for his philanthropic donations and support of Democratic politicians. However, his fortune vanished in November 2022 when FTX collapsed amidst a surge in customer withdrawals, exposing the misuse of funds to cover losses at Alameda Research, a cryptocurrency hedge fund that Bankman-Fried founded and Ellison ran between 2021 and 2022.
Bankman-Fried continues to appeal his conviction and sentence, claiming Judge Kaplan excluded evidence that could have demonstrated he believed FTX had sufficient funds to cover customer withdrawals. Although he admitted to making mistakes at FTX during his trial testimony, Bankman-Fried denied stealing money.
Defense lawyer Mark Cohen, in closing arguments, accused Ellison of shifting blame to Bankman-Fried to alleviate the pressure she faced after FTX’s collapse. During her three days of testimony, Ellison recounted how Bankman-Fried instructed her and others to take customer funds without their knowledge. Tearfully, she described how the collapse of FTX brought her relief from the “dread” she had lived with, and she expressed deep remorse over her involvement in the fraud.
Two other former FTX executives, Nishad Singh and Gary Wang, who also cooperated with prosecutors, are scheduled for sentencing on October 30 and November 20, respectively.
