Caroline Ellison to begin her 2 year prison sentence
On November 7, Caroline Ellison, the former CEO of Alameda Research and key witness against FTX founder Sam Bankman-Fried, is expected to report to prison to fulfill her two-year sentence for her involvement in criminal activities at cryptocurrency exchange FTX, according to a CNBC report.
At the time of writing, the Federal Bureau of Prisons (BOP) website listed Ellison as not in custody, but it also provided an inmate registration number (36854-510), age, race, sex, and an unknown release date.
The United States District Court for the Southern District of New York's Judge Lewis Kaplan sentenced Ellison to two years in prison on September 24. Ellison is expected to turn herself in by Thursday, November 7.
Judge Kaplan stated that the Federal Bureau of Prisons mandated that Ellison show up at a correctional facility by 19:00 Greenwich Mean Time (GMT) on November 7. It is expected that the former CEO of Alameda will turn herself in at a minimum security facility close to Boston, implying that she may be sent to the Federal Correctional Institution in Danbury, Connecticut, which houses both male and female prisoners.
Ellison pleads guilty to seven counts
Following FTX's collapse in 2022, Ellison entered a guilty plea to seven charges of wire fraud, securities fraud, commodities fraud, and money laundering pertaining to the misappropriation of user funds between Alameda and the cryptocurrency exchange. Additionally, she provided testimony during the Bankman-Fried 2023 criminal trial, which ended in a guilty verdict on all counts. Reports indicated a brief relationship between Ellison and Bankman-Fried.
In December 2022, Ellison negotiated a guilty plea to charges of financial fraud and conspiracy. She expressed profound shame and a heartfelt apology to the people she had hurt during her sentencing, saying she regretted not leaving FTX and Bankman-Fried.
Ellison becomes the third FTX executive sent to prison
Following the trial and conviction of former FTX CEO Sam Bankman-Fried and the guilty plea of former FTX Digital Markets co-CEO Ryan Salame, Ellison would be the third person named in the indictment of FTX and Alameda executives to report to prison. Judge Kaplan sentenced Nishad Singh, FTX's former engineering director, to serve time in October.
Bankman-Fried, who chose to proceed to trial, received a sentence of 25 years in prison and a forfeiture order of $11 billion in March 2024. In May, Ryan Salame, a former executive at FTX, received a sentence of 7.5 years in prison. Another former FTX executive, Nishad Singh, recently received a three-year supervised release instead of a jail sentence.
Ellison was perhaps the most well-known public figure associated with the collapse of FTX, second only to Bankman-Fried. In their September sentencing memo, prosecutors pointed out that Ellison had been the focus of intense media and public "attention and harassment."
The US government filing states that people scrutinized and criticized her physical appearance, ridiculed her in memes and other social media content, and harassed her outside the courthouse for comments and photos, making it difficult for her to enter and exit without an escort.
The collapse of FTX
On November 2, 2022, FTX started to collapse, and it lasted for ten days, until November 12. It all began with the CoinDesk article and the leaked balance sheet. Binance initially stated that it would sell all of its FTT tokens due to the funds' improper handling and confusion.
The precipitous drop in the value of FTT forced FTX clients to withdraw funds from their accounts. However, following the collapse of other cryptocurrency platforms such as Celsius Network and Voyager Digital, people began to worry about their investments.
FTX lost billions of dollars as a result of this enormous withdrawal. To generate the necessary funds from the withdrawals, Bankman-Fried gave Alameda Research directives to sell assets. Additionally, he looked for money to bridge the approximately $8 billion gap between what was owed and what could be paid.
On November 8, FTX eliminated the online withdrawal feature from the platform, making it impossible for hundreds of thousands of users to access their money. When FTX was unable to pay the $8 billion, it filed for bankruptcy. FTX crashed as a consequence of poor money management, low liquidity, and a large volume of withdrawals.
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