Caroline Ellison, a key witness in the case against her ex-boyfriend and FTX founder Sam Bankman-Fried, received a two-year prison sentence on Tuesday from a New York federal court. She was also ordered to forfeit $11 billion for her involvement in the extensive fraud and conspiracy that led to the collapse of the cryptocurrency exchange, previously valued at $32 billion, CNBC reports. The prison term was significantly stiffer than the recommendation by the federal Probation Department that Judge Lewis Kaplan sentence Ellison, who had run the hedge fund Alameda Research, to three years of supervised release, with no time at all behind bars. Alameda received much of the $8 billion in customer funds looted by Bankman-Fried from FTX. The stolen money was used for Alameda’s trading operation and other purposes. While Kaplan praised Ellison, 29, for her extensive cooperation with prosecutors — which led to the conviction of Bankman-Fried — the judge said her criminal sentence needed to deter other potential bad actors from committing fraud.
The judge said the FTX case is probably the greatest financial fraud perpetrated in the history of the U.S., and because of that a “literal get-out-of-jail-free card I can’t agree to,” Kaplan said in U.S. District Court in Manhattan. Assistant U.S. Attorney Danielle Sassoon urged Kaplan for leniency, citing Ellison’s consistent truthfulness while refusing to minimize her role in the fraud. Sassoon also said she could not overstate Ellison’s assistance in convicting Bankman-Fried. Kaplan allowed Ellison to remain free on bail until she surrenders to prison either on or after Nov. 7. Ellison reached a plea deal with prosecutors in December 2022, a month after FTX spiraled into bankruptcy. She pleaded guilty to conspiracy and financial fraud charges. Late Monday, Ellison’s attorneys in a court filing said they had finalized financial settlements with prosecutors and the FTX debtor’s estate. Both Bankman-Fried and Ellison had faced the same statutory maximum sentence of about 110 years in prison for their crimes.