Caroline Ellison Sentenced to Two Years in Prison for Role in FTX-Alameda Fraud

On September 24, 2024, a federal judge handed down a 24-month prison sentence to Caroline Ellison, the former CEO of Alameda Research, marking a significant milestone in the sprawling FTX fraud case that has captivated the financial and cryptocurrency sectors. Beyond her incarceration, Ellison must also forfeit approximately $11 billion and will face three years of supervised release following her sentence completion. The judge permitted her to serve her time at a minimum-security facility near Boston, where her family resides.

The Judge’s Nuanced Position: Recognizing Cooperation Within a Historic Crime

Federal Judge Lewis A. Kaplan’s remarks during sentencing revealed a complex judicial calculus—balancing genuine remorse and cooperation against the unprecedented scale of financial malfeasance. “You were vulnerable and you were exploited,” the judge told Ellison before announcing her sentence, while also acknowledging her authenticity: “You are genuinely remorseful.”

Kaplan praised Caroline Ellison’s level of cooperation with federal prosecutors, stating that in his 30 years on the bench, he had “never seen one quite like Miss Ellison.” Yet despite this extraordinary assistance, the judge made clear that leniency had limits. He noted that FTX represented “one of the greatest financial frauds ever perpetrated” in American history, emphasizing that cooperation alone could not serve as a “get out of jail free card” in a case of such magnitude.

Because this constitutes a federal crime, Caroline Ellison will be required to serve at least 75 percent of her sentence before becoming eligible for parole.

A Stark Contrast: Cooperation Versus Defiance

The sentencing of Caroline Ellison stands in sharp relief to that of Sam Bankman-Fried, the FTX founder and her former romantic partner, who received a 25-year prison sentence earlier in 2024. Assistant U.S. Attorney Danielle Sassoon underscored this distinction during Tuesday’s hearing, highlighting that unlike Bankman-Fried, Caroline Ellison demonstrated proactive cooperation with the Department of Justice and displayed genuine remorse for her actions.

During last year’s criminal trial against Bankman-Fried, Caroline Ellison served as a cornerstone prosecution witness. She testified that he orchestrated schemes to bribe foreign officials and deliberately provided misleading financial data to lenders—testimony prosecutors deemed instrumental in securing Bankman-Fried’s conviction on all seven counts of fraud and conspiracy. Bankman-Fried has since appealed his conviction.

Caroline Ellison’s Own Words: Acknowledging the Harm

Before the sentence was read, Caroline Ellison addressed the court directly. She apologized to customers of FTX and Alameda Research, along with her former colleagues, friends, and family. Speaking with visible emotion, she reflected on the magnitude of the crime: “The human brain is bad at comprehending big numbers. I can’t even begin to imagine the pain I’ve caused.”

She also expressed surprise at her own journey, telling the court: “If you had told me back in 2018 that I would end up pleading guilty to fraud, I would have told you you were crazy.” Caroline Ellison characterized the descent into criminality as gradual, stating: “At each stage of the process it became harder and harder to extricate myself…I’m sorry I wasn’t brave.”

Defense Arguments: Exploitation and Moral Recovery

Caroline Ellison’s legal team, led by Wilmer Hale Managing Partner Anjan Sahni, argued that she had been led astray by Bankman-Fried and had become susceptible to his influence partly due to their romantic relationship. Her attorneys contended that her primary motivation was to maintain Bankman-Fried’s approval, which caused her to participate in the fraudulent schemes. However, they argued, following FTX’s collapse, “she has recovered her moral compass.”

Both her defense counsel and the probation department had recommended that Caroline Ellison serve time served plus three years of probation, emphasizing that she posed no recidivism risk and had provided extraordinary cooperation to the government.

Next Steps and Timeline

Caroline Ellison has approximately 45 days before she must voluntarily surrender to the Bureau of Prisons to begin serving her 24-month sentence. Her case remains part of the broader legal reckoning surrounding the FTX collapse, which devastated thousands of cryptocurrency investors and employees when the platform imploded in November 2022.