The court sentenced Caroline Ellison to two years in prison over the FTX scandal

A federal judge found the former head of Alameda Research guilty and sentenced her. Caroline Ellison, 29, the company’s CEO, received 24 months in prison for her role in one of the largest financial crimes in U.S. history. In addition to the sentence, she was ordered to pay approximately $11 billion in restitution. After serving her sentence, Ellison will be under supervision for three years.

How the judge assessed Caroline Ellison’s cooperation

Despite the harsh sentence, Judge Lewis Kaplan expressed some sympathy for the defendant. The judge noted that Caroline Ellison was vulnerable and exploited. “You are genuinely remorseful,” he said before announcing the sentence.

A key factor in mitigating her punishment was Caroline Ellison’s active assistance to law enforcement. She served as a key witness in the trial against Sam Bankman-Fried, founder and former CEO of FTX. The judge emphasized the exceptional nature of her cooperation, stating that in his 30 years of practice, he had never seen such comprehensive and open assistance to the prosecution. Even this did not allow the judge to completely avoid incarceration — the severity of the crime required a real prison term.

From prosecution witness to Bankman-Fried’s associate

Caroline Ellison revealed details of the fraud to the court: Bankman-Fried allegedly tried to bribe foreign officials and intentionally provided creditors with false financial reports. Her testimony from last year was called the “cornerstone” of Bankman-Fried’s successful conviction by prosecutors.

The contrast between the two defendants is becoming more apparent. Bankman-Fried was found guilty on all seven counts and sentenced to 25 years in early 2024. Unlike him, he never showed remorse, and his behavior was aimed at preventing future crimes. The judge made it clear: Caroline Ellison’s approach — active cooperation with justice and sincere remorse — is entirely different.

The future path of the convicted

Caroline Ellison has about 45 days before she must voluntarily surrender to the Bureau of Prisons. The judge determined she can serve her sentence in a minimum-security facility near Boston, where her family lives. Since the crime is federal, Ellison will serve at least 75% of her sentence before being eligible for parole.

In court, Caroline Ellison made a brief statement, apologizing to former FTX and Alameda clients, colleagues, friends, and family. She acknowledged that the human brain poorly perceives large sums: “I can’t even imagine the pain I caused.” Ellison also shared her journey to admitting guilt: if someone had told her in 2018 that she would confess to fraud, she would have called it madness.

Insider trading investigation and platform roles

In addition to the main trial, new violations have been identified in the cryptocurrency sphere. Prediction market platform Kalshi accused two users of insider trading, including an employee of a well-known streamer and reality TV star MrBeast. Reports indicate that this user made trades based on information from MrBeast’s content. Kalshi suspended both accounts and imposed fines. Beast Industries confirmed that it is investigating its employee’s involvement in the violations.

The Commodity Futures Trading Commission (CFTC) issued a guidance letter, recognizing the platform’s actions and citing these cases as potential violations of law. The agency’s chair described exchanges like Kalshi as “the first line of defense” against insider trading, emphasizing their role in preventing market abuses.