Caroline Ellison, Former CEO of Alameda Research, Reports to Prison to Begin Two-Year Sentence

This development follows her sentencing in September, where she was also ordered to forfeit $11 billion due to her involvement in the fraudulent activities

Caroline Ellison, the former CEO of Alameda Research, began serving a two-year prison sentence on Thursday after reporting to a low-security federal prison in Connecticut.

Ellison was sentenced in September to two years in prison and ordered to forfeit $11 billion for her role in the fraudulent activities that led to the collapse of FTX, a cryptocurrency exchange once valued at $32 billion.

Ellison was a key figure in a “massive fraud scheme” that saw billions in customer funds misappropriated by FTX founder Sam Bankman-Fried to support Alameda’s trading operations and other ventures.

Following FTX's bankruptcy filing in late 2022, Ellison struck a plea deal with federal prosecutors, pleading guilty to conspiracy and financial fraud charges.

Ellison's cooperation with authorities played a crucial role in the conviction of Bankman-Fried, who was found guilty of multiple fraud charges earlier this year and sentenced to 25 years in prison.

Despite the federal Probation Department's recommendation for a sentence that included no prison time, Judge Lewis Kaplan emphasized the need for a deterrent effect, stating that her actions warranted a more significant punishment.

During the sentencing, Kaplan referred to FTX as “the greatest financial fraud perpetrated in the history of the US.” He acknowledged Ellison's “extensive cooperation” but maintained that a “get-out-of-jail-free card” was not an option.

At her sentencing, Ellison expressed deep remorse, reading a statement in which she apologized to those affected by her actions. Her emotional address included tears as she reflected on her failures, among them her inability to leave FTX and Bankman-Fried, with whom she had a romantic relationship.

Kaplan acknowledged her genuine remorse but maintained that a prison sentence was necessary to uphold justice and deter similar conduct in the future.

Ellison's punishment comes as several former FTX executives face legal repercussions for their roles in the scandal. Recently, Nishad Singh, another former executive, received a sentence of time served and three years of supervised release.

Meanwhile, Gary Wang, a computer programmer who helped build the FTX exchange, has also asked a federal judge to spare him jail time, arguing that his cooperation with prosecutors and alleged “relative lack of culpability” should result in a non-custodial sentence.

Wang is due to be sentenced by Ellison's same judge, Lewis Kaplan, on 20 November. According to his lawyer, Wang's wife is due to give birth to their son just days later:

“Gary was unaware of the scheme when it started, never informed of its particulars, and unlike Bankman-Fried, Ellison, and Singh, never once took an affirmative step to deceive anyone.”

At press time, the exchange's native token, FTT, trades at $1.71, up 1.6% in the 24-hour.