By Luc Cohen
NEW YORK (Reuters) – Former cryptocurrency executive Caroline Ellison is set to be sentenced on Tuesday for her role in her imprisoned former boyfriend Sam Bankman-Fried’s theft of about $8 billion in customer funds from the now-bankrupt FTX exchange he founded.
Ellison has pleaded guilty to seven felony counts of fraud and conspiracy, and testified as a prosecution witness in the trial of Bankman-Fried, who was convicted of fraud and other charges last year and is serving a 25-year prison sentence stemming from FTX’s November 2022 collapse.
At her sentencing hearing scheduled for 3 p.m. EDT (1900 GMT) before U.S. District Judge Lewis Kaplan in Manhattan, Ellison will learn how much leniency she will earn from her cooperation with prosecutors.
Ellison, 29, will almost certainly get far less prison time than Bankman-Fried did. The crimes to which she pleaded guilty carry a maximum sentence of 110 years in prison.
Her lawyers have argued that she should get no prison time due to her cooperation. Without recommending a specific prison term, the U.S. Attorney’s office in Manhattan, which brought the charges, also urged Kaplan to go easy on Ellison, citing her “extraordinary” cooperation and expression of remorse.
“As FTX collapsed, Bankman-Fried persisted in publicly denying knowledge and fault,” prosecutors wrote in a Sept. 17 court filing. “Ellison, on the other hand, expressed relief that the fraud was exposed, and responsibility for her wrongdoing.”
Prosecutors said Ellison met with them about 20 times to help them piece together FTX’s unraveling and make their case against Bankman-Fried.
Prosecutors have called Bankman-Fried’s actions one of the biggest financial frauds in U.S. history. Bankman-Fried, 32, rode a boom in cryptocurrency prices during the COVID pandemic to a net worth by October 2021 of, according to Forbes magazine, $26 billion. He gained prominence as a generous donor to philanthropic causes and Democratic politicians.
His wealth evaporated when FTX collapsed in November 2022 amid a flurry of customer withdrawals. The company had been widely viewed as a relative safe-haven in a cryptocurrency industry beset by volatility and scams.
Bankman-Fried was charged a month later with stealing FTX customer funds to plug losses at Alameda Research, a cryptocurrency-focused hedge fund he founded and that Ellison ran from 2021-2022. Ellison pleaded guilty in December 2022.
Bankman-Fried is appealing his conviction and sentence, arguing that Kaplan wrongly excluded evidence showing he thought FTX had enough funds to cover customer withdrawals. In testifying in his own defense at trial, Bankman-Fried admitted to making mistakes while running FTX, but denied stealing money.
In his closing argument at Bankman-Fried’s trial, defense lawyer Mark Cohen accused Ellison of “pointing at Sam” to escape the pressure she faced after FTX’s collapse.
Ellison testified over three days at Bankman-Fried’s trial, telling the jury he directed her and others to take money from FTX’s customers without their knowledge. In tearful testimony, Ellison said she felt “indescribably bad” about the fraud, and that FTX’s collapse lifted the “dread” hanging over her.
“I felt a sense of relief that I didn’t have to lie anymore,” Ellison testified.
Nishad Singh and Gary Wang, two other former FTX executives who cooperated with prosecutors, are scheduled to be sentenced on Oct. 30 and Nov. 20, respectively.
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