Former FTX executive Caroline Ellison sentenced to two years for role in crypto fraud

WASHINGTON — Caroline Ellison has been sentenced to two years in prison for her role in the collapse of the cryptocurrency exchange FTX, which has been described as one of the biggest financial frauds in US history.

Ellison, 29, was a top executive at the firm and is also the ex-girlfriend of its founder, Sam Bankman-Fried, who was sentenced to 25 years in prison for stealing more than $8bn (£6.3bn) from customers.

As part of a plea deal, Ellison admitted charges including wire fraud and money laundering, and testified against Bankman-Fried. She was also ordered to forfeit more than $11bn (£8.2bn) to the court and could pay more if she’s ordered to hand over any restitution.

She had faced a maximum sentence 55 times what she was given — 110 years in prison.

While Judge Lewis Kaplan called her cooperation with prosecutors “remarkable”, he said she was “gravely culpable” and that her help and remorse for the crimes should not be a “get out of jail free card”, according to Reuters.

In court, Ellison apologized to the victims of the scheme, according to US media reports.

“On some level, my brain can’t even comprehend the scale of the harm that I caused,” she said.

FTX was founded in 2019. Just two years later it had grown into the third biggest crypto exchange in the world, valued at $32bn (£26bn).

Its apparent success turned Bankman-Fried into a billionaire and business celebrity.

But, in 2022, rumors of financial trouble sparked a run on its deposits, precipitating the firm’s implosion and exposing Bankman-Fried’s crimes.

He was convicted by a New York jury last year on charges including wire fraud and conspiracy to commit money laundering, after a trial that detailed how he had used customers’ money for property purchases, investments and political donations.

Ellison was one of Bankman-Fried’s closest lieutenants and lived and worked in the company’s offices and luxury apartments in The Bahamas. The on-and-off couple built the dual empire of FTX and Alameda Research.

While Bankman-Fried was arrested and spent time in prison before his trial, Ellison remained free and agreed to help the criminal investigations

The revelation that she would testify against her former boyfriend and boss added to the drama of the high-profile trial.

Ellison testified over three days, telling the jury that Bankman-Fried directed her and others to take money from FTX’s customers without their knowledge.

In tearful testimony, she said she felt “indescribably bad” about the fraud.

Prosecutors said Ellison met them about 20 times to help them piece together FTX’s unraveling, and make their case against Bankman-Fried.

Prior to the sentencing, Ellison’s legal team had argued the help she provided meant she should not be sent to jail.

The US Attorney’s office in Manhattan, which brought the charges, had declined to call for a particular sentence, but acknowledged what it called her “extraordinary” cooperation and expression of remorse.

In May, Ryan Salame, the co-CEO of FTX’s Bahamian subsidiary, was sentenced to 90 months in prison.

Salame pleaded guilty in September last year to violating political campaign finance laws and operating an illegal money-transmitting business. — BBC