Caroline Ellison sentenced to 2 years in prison for FTX Fraud Role
Caroline Ellison, the former head of Alameda Research, received a two-year prison sentence on September 24 for her role in the now-collapsed cryptocurrency exchange FTX.
Judge Lewis Kaplan of the District Court of Southern New York imposed the sentence, ruling that Ellison would also have to give up the approximately $11 billion she received from FTX. Ellison's date of surrender will be on or after November 7, Kaplan added.
Ellison receives a lighter sentence for cooperating with prosecutors
Ellison was a senior executive at the company and the ex-girlfriend of Sam Bankman-Fried. Ellison may have received a sentence of 110 years in prison for her crimes, but Lewis showed a great deal of sympathy for her.
Judge Lewis Kaplan told Reuters that although she was "remarkable" in her cooperation with the prosecutors, she was "gravely culpable," and her assistance and regret for the crimes should not be a "get out of jail free card."
According to US media reports, Ellison apologized in court to the victims of the scheme.
Ellison's lawyers claim that since testifying at the Bankman-Fried trial, she has written a novel, worked on a math enrichment textbook for advanced high school students, and undertaken a significant amount of charitable work.
Additionally, they claimed that she has reestablished contact with old high school pals while working for and occasionally dating Bankman-Fried from 2017 until late 2022, and she is currently in a healthy romantic relationship.
There are still more FTX executives to be sentenced
Ryan Salame, a former executive at FTX, was given a seven and a half-year prison sentence in May. Sam Bankman-Fried, the founder of FTX, received a 25-year sentence in March.
Given the sentence, it is likely that co-defendants and former FTX executives Nishad Singh and Gary Wang will also go to jail. Wang will get his sentence on November 20 and Singh on October 30. They have entered a guilty plea to the charges against them, just like Ellison did.
The collapse of FTX
One of the most popular cryptocurrency exchanges in the world, FTX was well-known for its Super Bowl commercial and protracted lobbying effort in Washington before it crashed in 2022.
The collapse of FTX in November 2022 began on November 2 and continued for ten days, until November 12. The leaked balance sheet and the CoinDesk article set the whole thing off. Because the funds were handled improperly and were muddled, Binance first declared that it would sell all of its FTT tokens.
Due to the sharp decline in FTT's value, FTX clients were forced to take money out of their accounts. People were concerned about their investments though, after other cryptocurrency platforms, like Celsius Network and Voyager Digital, collapsed.
Billions of dollars were lost by FTX during this massive withdrawal. In order to raise the money required from the withdrawals, Bankman-Fried gave Alameda Research instructions to sell assets. He also searched for funding to close the roughly $8 billion difference between what was owed and what could be paid.
FTX removed the online option to withdraw money from the platform on November 8, preventing hundreds of thousands of customers from accessing their funds. FTX declared bankruptcy after failing to make the $8 billion payment. Due to poor money management, low liquidity, and a high number of withdrawals, FTX crashed.
FTX Criminal charges and lawsuits
Bankman-Fried and other high-ranking officials were charged with embezzling money from exchange customers in order to make high-risk investments, purchase opulent property in the Caribbean, illegally donate millions of dollars to political causes, and pay off Chinese officials.
On December 12, 2022, Bankman-Fried was taken into custody by authorities on several counts of FTX fraud. The U.S. District Court indicted Bankman-Fried on eight counts of criminal offenses, including securities fraud, money laundering, wire fraud, and violations of campaign finance laws.
With the largest-ever bond of $250 million, Bankman-Fried was freed from custody. 5 billion dollars' worth of cash and liquid assets had been retrieved as of January 2023. An estimate of the missing assets totaled $8 billion.
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