FTX Star Witness Caroline Ellison Begins 2-Year Prison Sentence

Cryptocurrency-executive-turned-government-witness Caroline Ellison’s stint in prison is officially underway.

Ellison, whose testimony helped convict FTX founder Sam Bankman-Fried for fraud last year, arrived at a Connecticut low-security federal prison Thursday (Nov. 7), CNBC reported, citing a Bureau of Prisons spokesperson.

Ellison was sentenced in September to two years in prison and ordered to forfeit $11 billion in connection with her role in the fraud and conspiracy that brought down FTX and rocked the crypto sector.

While both probation officials had recommended supervised release, and Ellison’s attorneys had asked for a non-custodial sentence, Judge Lewis Kaplan — who nonetheless praised her cooperation — said he needed to send a message.

A “literal get-out-of-jail-free card I can’t agree to,” Kaplan said.

Ellison, who had overseen FTX sister company Alameda Research, pleaded guilty to fraud and conspiracy. She also testified against Bankman-Fried — her former romantic partner — at his trial for stealing billions in customers funds.

Bankman-Fried was convicted of fraud and other charges last fall and given a 25-year prison term. He is appealing the sentence.

Another former FTX executive, Nishad Singh, was sentenced to three years of supervised release — with no prison time — last week. Prior to announcing the sentence, the judge noted Singh’s cooperation with prosecutors.

Singh had been FTX’s chief engineer. He, Ellison and another executive, Gary Wang, pleaded guilty to fraud and conspiracy and agreed to cooperate with prosecutors soon after the company’s collapse.

He, too, testified last year against Bankman-Fried at trial, telling jurors he was “embarrassed and ashamed” of the reckless and excessive spending by Bankman-Fried, even before he found out the money came from pilfered customer funds.

“It didn’t align with what I thought we were building the company for,” Singh said.

Wang, meanwhile, is slated to be sentenced later this month, and has reportedly asked for no prison time.

A former MIT classmate of Bankman-Fried, Wang was accused by the Securities and Exchange Commission (SEC) of coming up with the specific software code that helped Alameda to divert FTX customer funds.

During his testimony, Wang told the jury that in spite of being aware of the multibillion-dollar deficit at Alameda and FTX, Bankman-Fried repeatedly reassured customers and investors that “FTX was fine.”