Key witness in Sam Bankman-Fried trial requests no prison time at sentencing

Caroline Ellison, once a prominent executive in Sam Bankman-Fried’s defunct cryptocurrency empire and his former partner, is appealing for no prison time ahead of her impending sentencing.

Ellison’s legal team submitted the plea shortly before midnight on Tuesday, filing it with the Manhattan federal court as she prepares for her sentencing, set for September 24.

Her attorneys emphasized her immediate cooperation with U.S. authorities following the downfall of FTX and its associated companies in November 2022. They pointed out that the Probation Department recommended she be spared any prison time.

At 29, Ellison had pleaded guilty almost two years ago and provided key testimony against Bankman-Fried during his trial in November of last year, which lasted nearly three days. Following his conviction, Bankman-Fried received a sentence of 25 years in prison. Without Ellison’s assistance, her own sentence could have been significantly harsher.

“Caroline holds herself fully accountable for her actions,” her attorneys stated in the filing. “She is deeply remorseful and will carry the weight of her actions for the rest of her life.”

In their presentence arguments, the defense team elaborated on the personal relationship between Ellison and Bankman-Fried that evolved over several years. They argued that this romantic involvement and her subsequent role as CEO of Alameda Research, FTX’s hedge fund affiliate, were significant factors leading to her criminal behavior under Bankman-Fried’s influence.

During the trial, she revealed that she had informed employees about substantial fraud even before FTX declared bankruptcy. Ellison explained that misappropriated funds from FTX investors were used improperly to cover immense financial losses incurred by Bankman-Fried and to support his extravagant lifestyle through charitable contributions and political donations.

By early December 2022, Ellison was fully cooperating with federal prosecutors, providing valuable insights into Bankman-Fried’s financial dealings that resulted in charges against him soon after, as outlined by her legal team.

“Over time, Caroline’s moral compass became misaligned,” the attorneys stated. “Under Bankman-Fried’s direction, she executed actions she recognized as wrongful, assisting him in siphoning billions. She lived with constant fear, aware that a monumental collapse was likely, yet afraid that separating herself could accelerate that downfall.”

“When FTX ultimately crumbled, Caroline felt a profound sadness for all those they had wronged, but also a surge of relief as it meant she no longer had to continue deceiving and stealing for Mr. Bankman-Fried,” they continued.

Since her testimony at Bankman-Fried’s trial, Ellison has faced difficulties despite her ongoing charity work, the completion of a novel, and collaboration with her parents on a mathematics enrichment textbook for advanced students, as per her legal representatives.

“She has become effectively unemployable due to the notoriety surrounding this case, and the damage to her reputation is unlikely to diminish in the near future,” her team stated. “Caroline did not act out of greed nor did she seek to gain at the expense of customers.”

Currently, she is in a healthy relationship and has reestablished connections with high school friends, whom she lost touch with during her tenure with Bankman-Fried from 2017 until November 2022, according to court documents.

Additionally, her legal team noted that she is concluding agreements with the government and FTX debtors, along with a comprehensive settlement concerning the multidistrict litigation linked to FTX, which she believes will result in her receiving nothing from her time at Alameda.

Prosecutors are expected to submit their presentence arguments before the sentencing takes place.