Ellison gets two years for involvement in FTX crypto scandal

Caroline Ellison has received a two-year prison sentence for her role in the demise of the cryptocurrency exchange FTX, which is regarded as one of the most serious financial frauds in US history.

Ellison, 29, was a top executive at FTX and the former girlfriend of the company’s founder, Sam Bankman-Fried, who is now serving a 25-year prison sentence for embezzling more than $8 billion from customers.

Ellison pleaded guilty to several offences, including wire fraud and money laundering, and cooperated with prosecutors by testifying against Bankman-Fried. Along with her term, she has been sentenced to forfeit more than $11 billion to the court, with the option of paying more if necessary to give restitution.

Ellison’s sentence was lowered drastically as a result of her cooperation, after she was first sentenced to 110 years in prison. Judge Lewis Kaplan praised her assistance, calling it “remarkable,” but emphasised that her involvement in the crimes made her “gravely culpable,” noting that her remorse and cooperation did not fully free her.

In her court statement, Ellison expressed deep regret, saying, “On some level, my brain can’t even comprehend the scale of the harm that I caused.”

Founded in 2019, FTX quickly rose to become the world’s third-largest cryptocurrency exchange, reaching a peak valuation of $32 billion. Bankman-Fried became a prominent figure in the corporate world due to the company’s rapid growth, but in 2022, rumours of financial instability triggered a run on deposits, leading to FTX’s collapse and exposing the fraudulent activities at its core.

A New York jury convicted Bankman-Fried last year on charges of wire fraud and conspiracy to commit money laundering. The trial revealed that he had misused customer funds for personal investments, real estate, and political donations.

Ellison, one of his closest confidantes, lived and worked in the company’s Bahamian offices, and together they led both FTX and Alameda Research. While Bankman-Fried was held before his trial, Ellison was released, cooperating with investigators and finally consenting to testify against him. Her decision to testify in the high-profile trial added to the excitement that surrounded the trial.

During her three-day testimony, Ellison described how Bankman-Fried directed her and others to use customer funds without their consent. She cried as she stated feeling “indescribably bad” about the fraudulent actions.

Prosecutors revealed that Ellison met with them on many occasions to help put together the detailed facts of FTX’s financial collapse and build a case against Bankman-Fried. Despite the assistance, her legal team contended that her significant collaboration should result in her release from prison.

The US Attorney’s Office in Manhattan, which is in charge of the allegations, did not recommend a specific sentence but did appreciate her “extraordinary” cooperation and genuine remorse.

Ellison’s sentencing follows that of Ryan Salame, co-CEO of FTX’s Bahamian subsidiary, who received a 90-month prison term in May. Salame had pleaded guilty to campaign finance violations and running an illegal money-transmitting business in September of last year.

(Photo by Traxer)

See also: Market turbulence: Cryptos plunge on weak economic signals

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