FTX Insider Caroline Ellison Sentenced to Two Years in Prison

The potency of Ellison’s testimony against Bankman-Fried will also have gone a long way to convincing the judge to show leniency, says Paul Tuchmann, a former US prosecutor and partner at the law firm Wiggin and Dana.

Testifying at Bankman-Fried’s criminal trial in October 2023, Ellison depicted her former paramour as the driving force behind the FTX fraud. On the stand, she painted Bankman-Fried as forceful and calculating and described for the jury his various deceptions, the careful curation of his public image, and his warped relationship with risk. Bankman-Fried “was totally comfortable with taking a risk, as long as he thought it was a positive expected value,” said Ellison, under examination by the prosecution. “He talked about being willing to take large coin flips, like a coin flip where if it comes up tails, you might lose $10 million, but if it comes up heads, you make slightly more than $10 million.”

Ellison cried on the stand as she recalled her “state of dread,” racked with guilt about the stolen funds, and the perverse relief she felt when FTX began to crumble. “It’s something that had been on my mind every day, worrying about what would happen when the truth finally came out,” said Ellison. “I felt a sense of relief that I didn’t have to lie anymore.”

“In cases like this, it is usually so important to the prosecution to have someone who is close to the lead defendant you are trying, who can take the jury inside,” says Tuchmann. “She was an immensely valuable witness in an immensely important case.”

The judge took that cooperation into account. “I’ve seen a lot of cooperators in 30 years. I’ve never seen one like Ms. Ellison,” said Kaplan. It was “remarkable” that there was “not one instance” where Ellison’s testimony and interviews with law enforcement differed from the material evidence in the case, he said.

The cost to Ellison likely also played a role in the judge’s leniency. “In this case, you had what was close to harassment [of Ellison] because of the very large amount of press coverage of the case. Then you had the fact that her personal, romantic life was revealed to the world—which would be very painful for anybody,” says Tuchmann. “You can get more credit if the cooperation has consequences. The consequences to her were great.”

As Ellison prepares to begin her time behind bars, other members of the FTX inner circle await their own sentences. Former FTX executives Nishad Singh and Gary Wang, both of whom have pleaded guilty to fraud, will be sentenced on October 30 and November 20, respectively.

Meanwhile, in a bid to escape his own lengthy prison sentence, Bankman-Fried is pushing for a retrial. “Sam Bankman-Fried was never presumed innocent … He was presumed guilty by the judge who presided over his trial,” wrote his lawyers in a filing in the US Court of Appeals. But the chances of the conviction being overturned are slim, and the decision to fight the charges against him to the bitter end—in contrast to Ellison and the other coconspirators—may continue to prove an unfruitful one.

“Kaplan is a highly respected judge, particularly in complex white-collar cases. The theme of the brief—that he got it all wrong—is a very hard argument to make,” says Naftalis. “The appeal is a long shot.”

As people filed out of the courtroom on Tuesday, Ellison’s two younger sisters were visibly, but silently, crying next to their parents. One of Ellison’s lawyers touched her back to comfort her. Ellison didn’t move.

Additional reporting by Caroline Haskins.