Caroline Ellison, the star witness in the prosecution of FTX founder Sam Bankman-Fried, reported to a low-security federal prison in Connecticut on Thursday, according to a Bureau of Prisons spokeswoman.
In September, Ellison received a two-year prison sentence and an order to forfeit $11 billion for her involvement in the massive fraud and conspiracy that brought down the $32 billion Bitcoin exchange.
The federal Probation Department recommended that Judge Lewis Kaplan sentence Ellison to three years of supervised release with no time in prison. Defense attorneys had also urged a sentence that did not include prison time.
While Kaplan applauded Ellison for her substantial cooperation with prosecutors, which led to Bankman-Fried’s conviction, the judge stated that her prison sentence was necessary to dissuade other possible undesirable actors from committing fraud.
Ellison led Alameda Research, FTX’s sibling hedge fund. She was romantically linked with Bankman-Fried.
Bankman-Fried stole $8 billion in customer cash from FTX, and Alameda received a large portion of that money. Alameda used the stolen funds for its trading operations and other objectives.
Ellison reached a plea deal with prosecutors in December 2022, a month after FTX declared bankruptcy. She pleaded guilty to conspiracy and financial fraud counts.
Kaplan referred to FTX as the worst financial scam in US history, telling the Manhattan court during the sentence hearing that it was a “literal get-out-of-jail-free card I can’t agree to.”
“I’ve seen a lot of cooperators over the years, and I’ve never seen one quite like Miss Ellison,” said Kaplan, who also stated that Ellison was really sorry for her crimes and that her cooperation came at a high emotional cost for her.
Late last month, a court sentenced former FTX executive Nishad Singh to time served and three years of supervised release, making him the fourth former employee of the defunct cryptocurrency exchange to face legal action.
Ellison read from a statement at her sentencing in a weak voice, often crying, as she apologized to those she had injured and expressed her immense shame. She also apologized for not being brave enough to walk away from FTX and Bankman-Fried.
Kaplan permitted Ellison to remain free on bond until he surrendered to prison on or after November 7.
In March, Kaplan found Bankman-Fried guilty of all seven criminal fraud accusations against him after he elected to stand trial. In March, Kaplan sentenced him to 25 years in prison and ordered him to pay a forfeiture of $11 billion.
Bankman-Fried and Ellison faced the same statutory maximum punishment of around 110 years in jail for their offenses.