The Blubber

Caroline Ellison has been sentenced to two years in prison for her involvement in the collapse of the cryptocurrency exchange FTX, one of the largest financial frauds in U.S. history. Ellison, a top executive at FTX and the former girlfriend of its founder, Sam Bankman-Fried, played a key role in the scandal. Bankman-Fried was sentenced to 25 years in prison for misappropriating over $8 billion from customers.

As part of a plea deal, Ellison admitted to charges including wire fraud and money laundering, and she testified against Bankman-Fried. She was also ordered to forfeit more than $11 billion to the court, with the possibility of further restitution. Originally, Ellison faced a maximum sentence of 110 years, but her cooperation with prosecutors significantly reduced her punishment.

Judge Lewis Kaplan, who presided over the case, described Ellison’s assistance as "remarkable" but emphasized that her remorse and cooperation did not excuse her "grave culpability." He rejected the notion that her actions should allow her to escape jail time.

FTX, founded in 2019, quickly grew into the world's third-largest cryptocurrency exchange, valued at $32 billion. This meteoric rise made Bankman-Fried a billionaire and a well-known figure in the business world. However, by 2022, rumors of financial instability led to a run on deposits, causing FTX to implode and revealing Bankman-Fried's extensive crimes.

Bankman-Fried was convicted on charges such as wire fraud and conspiracy to commit money laundering, with the trial uncovering how he used customer funds for personal investments, property purchases, and political donations.

Ellison was one of Bankman-Fried’s closest associates, both personally and professionally. They lived and worked together in FTX's offices and luxury apartments in The Bahamas, managing both FTX and Alameda Research. While Bankman-Fried was arrested and spent time in custody before his trial, Ellison remained free, agreeing to cooperate with the investigation.

Her decision to testify against Bankman-Fried drew significant attention during the high-profile trial. Over three days of emotional testimony, Ellison admitted that she and others took customer funds at Bankman-Fried's direction without their knowledge. She expressed deep regret, telling the court she felt "indescribably bad" about the fraud.

Prosecutors acknowledged Ellison's extensive help, noting she met with them around 20 times to assist in building the case against Bankman-Fried. Before her sentencing, Ellison’s defense team argued that her cooperation should exempt her from prison time. While the U.S. Attorney’s office in Manhattan, which brought the charges, did not recommend a specific sentence, they recognized her "extraordinary" cooperation and remorse.

In a related case, Ryan Salame, the co-CEO of FTX's Bahamian subsidiary, was sentenced to 90 months in prison in May. He had pleaded guilty in September to violating campaign finance laws and running an illegal money-transmitting business.