• Ellison pleaded guilty to fraud and conspiracy and cooperated with prosecutors
• Testified against former boyfriend, Sam Bankman-Fried
• Her lawyers pushed for no prison time; she was sentenced to two years

In a significant case stemming from the collapse of cryptocurrency exchange FTX, former executive Caroline Ellison was sentenced to two years in prison on Tuesday for her role in the misappropriation of $8 billion in customer funds. Despite her extensive cooperation with authorities, U.S. District Judge Lewis Kaplan expressed reluctance to let remorse and assistance serve as a “get out of jail free card” for such a major financial crime.

Ellison, 29, had pleaded guilty to seven felony charges, including fraud and conspiracy, and testified against Sam Bankman-Fried, the founder of FTX and her former boyfriend. Bankman-Fried was convicted of multiple fraud charges last year and is currently serving a 25-year sentence. The prosecution has described his actions as one of the largest financial frauds in U.S. history.

Facing a potential maximum sentence of 110 years, Ellison’s defense team argued for no jail time due to her cooperation with prosecutors, who also requested leniency. Judge Kaplan, however, emphasized that while her cooperation was exceptional, her involvement in the fraud could not be overlooked.

“You were gravely culpable in this fraud,” Kaplan stated. “But your remarkable cooperation sets you apart from Bankman-Fried.” He also expressed confidence that she would not engage in similar criminal behavior in the future.

Ellison, who ran Alameda Research—Bankman-Fried’s cryptocurrency hedge fund—between 2021 and 2022, spoke emotionally before the court, expressing deep regret for her actions. “Not a day goes by when I don’t think about all the people I hurt,” she said. “My brain can’t fully comprehend the scale of the damage I caused, but I try.”

Ellison shared that she had considered leaving Alameda multiple times but was influenced by Bankman-Fried’s presence in her life. “Every time I thought about it, I heard Sam’s voice in my head,” she admitted, her voice breaking. “I’m sorry I wasn’t brave enough to act.”

Prosecutors acknowledged Ellison’s critical role in securing Bankman-Fried’s conviction. She met with the prosecution around 20 times, helping to unravel the complexities of FTX’s downfall. “Unlike Bankman-Fried, she was not motivated by greed,” prosecutor Danielle Sassoon noted. “Her testimony was indispensable in bringing him to justice.”

Ellison’s attorney, Anjan Sahni, argued that her full cooperation should have spared her from prison, stating it would send “a powerful message” about the value of assisting the government in financial crime cases. Despite this, Judge Kaplan determined a two-year sentence was appropriate, with Ellison likely to serve slightly less time for good behavior.

Ellison is set to begin her sentence in November at a minimum-security facility. Meanwhile, two other former FTX executives, Nishad Singh and Gary Wang, who also cooperated with prosecutors, are scheduled to be sentenced in the coming months.

Bankman-Fried’s rise to fame during the cryptocurrency boom, where his net worth peaked at $26 billion, was followed by his rapid fall when FTX collapsed amid customer withdrawals in late 2022. He is currently appealing his conviction and sentence. Ellison, who pleaded guilty in December 2022, provided critical testimony against him, describing how he directed her and others to use FTX customer funds without their knowledge.