Caroline Ellison, key witness in FTX trial, urges leniency ahead of sentencing in crypto fraud case

Caroline Ellison, a key witness in the FTX trial, said she deserves no prison time for her role in one of the largest financial frauds in history and federal prosecutors seem inclined to agree.

Ellison's attorneys urged Judge Lewis Kaplan to be lenient when he sentences her Tuesday afternoon, arguing Ellison "unflinchingly acknowledged her own wrongdoing, without minimization, blame shifting or self-pity." They added, "She time and again proved herself an enormously credible and important cooperating witness" against her on again-off again boyfriend, former FTX CEO Sam Bankman-Fried.

Ellison was the co-chief executive of Alameda Research, Bankman-Fried's companion hedge fund. She testified for three days at his trial that ended with a conviction on all seven counts: wire fraud and conspiracy to commit wire fraud on FTX's customers; wire fraud and conspiracy to commit wire fraud on Alameda Research's lenders; conspiracy to commit securities fraud on FTX's investors; conspiracy to commit commodities fraud on FTX's customers; and conspiracy to commit money laundering.

Federal prosecutors agreed Ellison provided "extraordinary cooperation that was crucial to the Government's successful prosecution" of Bankman-Fried.

"Although she did not blow the whistle on any misconduct before FTX's collapse, she came clean prior to FTX's declaring bankruptcy to her employees on November 9, 2022," prosecutor Danielle Sassoon wrote in a letter to the judge. "Ellison approached her cooperation with remarkable candor, remorse, and seriousness."

Prosecutors declined to make a specific sentencing recommendation. Defense attorneys suggested a sentence in line with a recommendation from probation officials of time served plus three years of supervised release.

"Caroline poses no risk of recidivism and presents no threat to public safety. It would therefore promote respect for the law to grant leniency in recognition of Caroline's early disclosure of the crimes, her unmitigated acceptance of responsibility for them, and—most importantly—her extensive cooperation with the government," defense attorney Anjan Sahni wrote in a letter to the judge.

Sahni outlined Ellison's "complex" relationship with Bankman-Fried that began when the two met at Jane Street Capital in 2015 when she was an intern and he was a junior trader.

"Caroline moved around the globe at his direction, first to Hong Kong and later the Bahamas" while working "long, stressful, Adderall-fueled hours," Sahni said.

"Caroline was in an on-again-off-again, sometimes-secret relationship with Mr. Bankman-Fried that she understood at the time was fundamentally unequal. Deeply unhappy, Caroline repeatedly considered leaving Alameda, but Mr. Bankman-Fried convinced her to stay, telling her she was essential to the survival of the business, and that he loved her (while also perversely demonstrating that he considered her not good enough to be seen in public with him at high-profile events)," the defense letter said.

Her attorney said it all "warped" her moral compass and led her to take actions "that she knew to be wrong, helping him steal billions."

Bankman-Fried was sentenced to 25 years in prison in March. He has filed an appeal to overturn his conviction.

Editor's note: An earlier version of this story said Ellison was a former FTX executive. This story has been updated to reflect she worked for Bankman-Fried's crypto hedge fund, Alameda Research.