Sam Bankman-Fried’s ex: ‘Brains struggle with big numbers,’ gets 2 years for FTX fraud

Caroline Ellison, the former co-CEO of Alameda Research, has been sentenced to two years in prison for her involvement in one of the largest financial frauds in U.S. history. Ellison’s case is closely tied to the downfall of Sam Bankman-Fried, who was her boss and former boyfriend, and who is currently serving a 25-year sentence for his own financial crimes stemming from the FTX collapse.

During the sentencing proceedings held in Manhattan federal court, U.S. District Judge Lewis Kaplan praised Ellison for her cooperation with authorities. He described her as one of the best “cooperators” he has encountered in his 30 years as a judge, highlighting the “near-flawless” nature of her testimony against Bankman-Fried. However, Judge Kaplan emphasized that Ellison still needed to face consequences for her actions.

Under the terms of her sentencing, Ellison is required to forfeit approximately $11 billion. While serving her two-year sentence, she will be allowed to stay in a minimum-security facility.

Ellison acknowledged her wrongdoing and expressed regret during the court proceedings. Her defense attorney, Anjan Sahni, noted his admiration for Ellison’s willingness to accept responsibility, pointing out her youth and the emotional toll of her situation. Sahni mentioned Ellison’s commitment to returning everything she earned from FTX as a demonstration of her accountability.

At the hearing, Ellison emotionally stated, “I want to start by saying how sorry I am,” adding, “Not a day goes by that I don’t think about all of the people I hurt.” She reflected on her failure to act decisively when she first identified the unethical behavior associated with Bankman-Fried, admitting that she felt unable to detach herself from him.

Assistant U.S. Attorney Danielle Sassoon argued in favor of a lenient sentence, consistent with the recommendations made in a prior sentencing memo. Although Ellison participated in the theft of billions from customer accounts, which contributed significantly to the collapse of FTX in 2022, prosecutors acknowledged that her cooperation was pivotal in securing Bankman-Fried’s conviction.

The memo stated, “Ellison’s testimony was critical to indict and convict Bankman-Fried, and to understanding both the timeline of the fraud schemes and the various layers of wrongdoing.” The government underscored that her insights facilitated a clearer understanding of the fraud’s mechanics, which would have been challenging to demonstrate without her contributions.

Neama Rahmani, a former federal prosecutor, explained that it is typical for judges to grant lighter sentences to defendants who provide significant cooperation. Rahmani remarked, “Ellison was the cornerstone of the government’s case,” given her direct knowledge of Bankman-Fried’s actions and her personal connections to him.

Ellison had pleaded guilty in December 2022 to multiple charges, including wire fraud and conspiracy. Despite the potential for a staggering 110-year prison sentence under federal guidelines, Judge Kaplan decided against an excessively harsh penalty, deeming a century-long incarceration “absurd.”

FBI agents executed a search warrant at her parents’ home in Boston in November 2022, where they seized her devices. On the same day, Ellison expressed her willingness to cooperate with prosecutors, which she began formally doing three weeks later, consistently maintaining a candid approach throughout the process.

The government’s memo noted that Ellison accepted full responsibility from the outset and did not attempt to shift the blame to others. She provided detailed information about her involvement in the crimes, even acknowledging her role in creating misleading financial documents used to deceive Alameda’s lenders.

These documents, particularly a complex balance sheet spreadsheet, were crucial in demonstrating Bankman-Fried’s intent, knowledge, and motives, according to the prosecution. Ellison’s ability to clarify these materials significantly aided the government’s case, which would otherwise have struggled to present such evidence effectively.

Despite her wrongdoings, the court noted that Ellison has faced extensive public scrutiny and harassment, some of it at the hands of Bankman-Fried. He has been accused of leaking her private writings to the media in an effort to humiliate her, which contributed to her challenging post-scandal life.

The defense team asserted that Ellison had found solace in a new relationship since her public downfall, describing her current partner as a positive influence compared to Bankman-Fried. Her legal representation requested no prison time, arguing that she has been effectively unemployable due to the fallout from the FTX case, and highlighted her charitable efforts during her period of bail.

Among her co-defendants, Ryan Salame, who operated an FTX subsidiary, is serving a 7.5-year sentence after pleading guilty last September. Other key figures, including Nishad Singh and Gary Wang, are also awaiting sentencing later this year.

Bankman-Fried has appealed his sentence, claiming bias from the presiding judge during his trial.