Caroline Ellison, former CEO of Alameda Research and a key witness in the FTX trial, might not face jail time. Her lawyers are pushing for a sentence of no prison time in connection with the collapse of the crypto giant FTX.
They argue that her full cooperation with US authorities should be enough to keep her out of prison. In a court filing, Caroline’s lawyers suggested time served and supervised release as a reasonable sentence.
They emphasized her swift return to the US in 2022 from FTX’s Bahamas headquarters and her voluntary cooperation with both the US Attorney’s Office and financial regulators.
This helped the authorities understand what went wrong at FTX and Alameda Research. She didn’t drag her feet and worked with investigators right away, unlike others in the FTX disaster.
Caroline’s testimony was important
Judge Lewis Kaplan, who handled Sam Bankman-Fried’s case, already cited Caroline’s testimony when handing down the FTX founder’s 25-year prison sentence.
Caroline, unlike Sam, didn’t go to trial. She made a plea deal back in December 2022, just a month after FTX collapsed. In this deal, she pleaded guilty to charges of conspiracy and financial fraud.
She wasn’t in for the long legal fight like her ex-boyfriend, who was convicted of all seven criminal fraud charges.
Caroline’s lawyers argue that the court’s Probation Department also backs this no-prison recommendation. The department suggested a sentence of time served with three years of supervised release.
Why? They credited her for her “extraordinary cooperation” with the government and pointed out her “otherwise unblemished record.”
The department also stated that Caroline should not face any fines, adding that many character references praised her ethics and integrity.
“Caroline poses no risk of recidivism and presents no threat to public safety,” her attorneys said.
FTX CEO praises Caroline
John Ray, the current CEO of FTX who is managing the company’s bankruptcy, gave Caroline credit for helping save hundreds of millions of dollars in assets.
He detailed how she provided vital information, including private keys to cryptocurrency wallets, DeFi positions, and internal FTX account information.
Caroline also reportedly shared insights into the company’s use of third-party exchanges for pre-bankruptcy trading and FTX’s previous auditing practices.
John emphasized that her cooperation was valuable in protecting and preserving assets that might have otherwise disappeared into thin air during the bankruptcy proceedings.
The court filing also detailed her journey from Boston to Hong Kong and then to the Bahamas, following Sam’s lead. The relationship between the two became a focal point.
Her legal team claimed that Sam isolated her and twisted her moral compass, forcing her into a toxic situation where she helped “steal billions” while living in fear of the inevitable collapse.
Caroline’s lawyers also described how she lived with constant anxiety, knowing that the company was on the verge of falling apart, but too scared to pull away, fearing it would only make things worse.
Sam, they claimed, convinced her that she was essential to FTX’s survival and manipulated her with promises of love and importance.
At the same time, he kept her from high-profile events, meaning he didn’t even think she was good enough to be seen publicly with him.
Emotional recovery
The filing also touched on Caroline’s personal life, revealing that she has found solace in a new relationship.
While the document didn’t name her new partner, it said that her friends see this individual as a positive influence, helping her find stability in the aftermath of the FTX disaster.
There’s also mention of a novel Caroline has written, which, notably, is unrelated to the events of the FTX case. She has a sentencing hearing scheduled for September 24.
This will take place in the same courthouse where she testified for several days during Sam’s trial. She isn’t the only former FTX executive awaiting sentencing, though.
Nishad Singh and Gary Wang, both former roommates of Caroline and executives at FTX, will be sentenced in October and November, respectively.
Like Caroline, they have also cooperated with authorities, but their fates in court are uncertain.
Meanwhile, Sam is currently behind bars in federal prison after being sentenced in March. His trial ended in late 2023.
The prosecution argued that he engaged in multiple fraud schemes, including conspiracy to commit wire fraud and securities fraud.
He was accused of misusing customer deposits to cover the financial losses of his trading firm, Alameda Research, and fund his luxury lifestyle. This included expensive real estate and huge political donations.
Right now, Sam is actively appealing his conviction. His legal team claims that the trial wasn’t fair due to biased media coverage and mishandling of evidence by the prosecution.
The appeal process is expected to drag on for months, or even years, but in the meantime, he’ll remain incarcerated.
