Former crypto hedge fund Alameda Research CEO Caroline Ellison departs the trial of former FTX Chief Executive Sam Bankman-Fried at Federal Court in New York on Oct. 10, 2023.Cheney Orr/Reuters
U.S. prosecutors made a case for leniency for former FTX cryptocurrency executive Caroline Ellison when she is sentenced over her role in the exchange’s collapse, citing her help in sending FTX founder Sam Bankman-Fried to prison for 25 years.
In a letter on Tuesday to U.S. District Judge Lewis Kaplan in Manhattan, prosecutors stopped short of recommending a specific punishment for Ellison.
But they said the 29-year-old’s “extraordinary” co-operation justified a sentencing reduction from what she might otherwise deserve after pleading guilty to fraud and conspiracy charges.
“The ‘what’ and ‘how’ of the crimes, as well as the ‘why,’ would have been difficult to prove without Ellison’s testimony,” prosecutors said in the letter.
Lawyers for Ellison did not immediately respond to requests for comment. They have asked that Ellison receive no time behind bars following her scheduled Sept. 24 sentencing.
Bankman-Fried, a 32-year-old former billionaire, was accused of looting $8 billion from FTX customers, in large part to plug losses at his hedge fund Alameda Research, where Ellison was chief executive.
FTX collapsed in November 2022 and filed for bankruptcy.
Prosecutors said Ellison’s help, including at least 20 meetings with the government and three days on the witness stand, was crucial to Bankman-Fried’s conviction last November.
Ellison testified that Bankman-Fried, her former boyfriend, directed that FTX customer funds be used to prop up Alameda, and thought following rules such as “don’t lie” or “don’t steal” was less important than otherwise doing good for many people.
Prosecutors said Ellison persevered despite harsh media and public scrutiny, including being mobbed at the courthouse and mocked on social media, and Bankman-Fried’s effort to “weaponize” her personal writings to intimidate her.
“The government cannot think of another co-operating witness in recent history who has received a greater level of attention and harassment,” prosecutors said.
“Throughout, however, and certainly during her testimony, Ellison steadfastly remained candid and dedicated to telling the truth – as embarrassing as it often was for her – and in assisting with bringing the most culpable party to justice.”
Though prosecutors said Ellison could theoretically receive 110 years in prison because of the huge losses suffered by FTX customers, her punishment will likely be much lighter than what Bankman-Fried received from Kaplan.
Bankman-Fried is appealing his conviction and sentence.