By Caroline Ellison, the star witness in the prosecution of her former boyfriend, FTX founder Sam Bankman-Fried, was sentenced Tuesday in New York federal court to two years in prison and ordered to forfeit $11 billion for her role in the massive fraud and conspiracy that doomed the cryptocurrency exchange once valued at $32 billion.
The prison term was significantly stiffer than the recommendation by the federal Probation Department that Judge Lewis Kaplan sentence Ellison to three years of supervised release, with no time at all behind bars.
Defense lawyers also had requested a no-prison sentence for Ellison, who had run Alameda Research, a hedge fund connected to FTX.
While Kaplan praised Ellison for her extensive cooperation with prosecutors — which led to the conviction of Bankman-Fried — the judge said her criminal sentence needed to deter other potential bad actors from committing fraud.
A “literal get-out-of-jail-free card I can’t agree to,” Kaplan said in U.S. District Court in Manhattan.
“I’ve seen a lot of cooperators over the years and I’ve never seen one quite like Miss Ellison,” said Kaplan, who also said he believed that Ellison was genuinely remorseful for her crimes, and that her cooperation carried a steep price for her emotionally.
Ellison reached a plea deal with prosecutors in December 2022, a month after FTX spiraled into bankruptcy. She pleaded guilty to conspiracy and financial fraud charges.
Bankman-Fried, in contrast, chose to stand trial and was convicted of all seven criminal fraud charges against him in the same courthouse where she was sentenced.
He was sentenced to 25 years in prison in March and also was ordered to pay $11 billion in forfeiture.
Bankman-Fried since then has appealed his conviction, and requested a new trial and a different judge, arguing that Kaplan was biased against him.
Late Monday, Ellison’s attorneys in a court filing said they had finalized financial settlements with prosecutors and the FTX debtor’s estate.
Both Bankman-Fried and Ellison had faced the same statutory maximum sentence of about 110 years in prison for their crimes.
But defendants in criminal cases who cooperate with prosecutors instead of fighting the charges particularly in white-collar cases such as FTX, often receive leniency when they are sentenced.
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