Caroline Ellison, the former CEO of Alameda Research and key witness in the prosecution of FTX founder Sam Bankman-Fried, reported Thursday to a low-security federal prison in Connecticut to begin her two-year sentence.
This development follows her conviction in September, where she was also ordered to forfeit $11 billion for her involvement in the murder. fraudulent activities that led to the collapse of the $32 billion FTX cryptocurrency exchange.
Judge calls FTX fraud ‘largest financial fraud in American history’
Ellison’s legal troubles stem from its role in a “massive fraud scheme” in which billions in customer funds were embezzled by Bankman-Fried to support the trading activities of Alameda and other companies.
After FTX declared bankruptcy in late 2022, Ellison reached a plea deal with federal prosecutors, admitting charges of conspiracy and financial fraud.
Ellison’s cooperation with authorities reportedly played a crucial role in the conviction of Bankman-Fried, who was found guilty of multiple fraud charges earlier this year and sentenced to 25 years in prison.
Despite the federal probation department’s recommendation for a sentence without prison time, Judge Lewis Kaplan emphasized the need for a deterrent effect and stated that her actions warranted a harsher sentence.
During sentencing, Kaplan referred to FTX as “the largest financial fraud committed in US history.” He emphasized Ellison’s “extensive cooperation” but made clear that a “no-jail-free card” was no guarantee. option.
FTX executives face legal consequences
At her sentencing, Ellison expressed deeply remorseful, as she read a statement apologizing to those affected by her actions. Her emotional speech included tears as she reflected on her failures, including her inability to leave FTX and Bankman-Fried, with whom she was romantically involved.
Kaplan acknowledged her sincere remorse, but insisted a prison sentence was necessary to uphold justice and deter similar behavior in the future.
Ellison’s punishment is coming then several former FTX executives sight legal consequences for their role in the scandal. Recently, Nishad Singh, another former director, was given a sentence of credit for time served and three years of supervised release.
Meanwhile, so has Gary Wang, a computer programmer who helped set up the FTX exchange asked a federal judge to spare him prison time, arguing that his cooperation with prosecutors and alleged “relative lack of culpability” should result in a non-custodial sentence.
Wang will be sentenced on Nov. 20 by the same Ellison judge, Lewis Kaplan. Wang’s lawyer said he expected the birth of his son just days later. Ilan Graff, Wang’s lawyer, said:
Gary was unaware of the scheme when it began, was never informed of its details, and unlike Bankman-Fried, Ellison and Singh, never took a positive step to deceive anyone.
Currently, the exchange’s native token, FTT, is trading at $1.71, up 1.6% in 24 hours.
Featured image of DALL-E, chart from TradingView.com