Caroline Ellison, former girlfriend of disgraced crypto bro Sam Bankman-Fried, sentenced to 2 years in prison for conspiracy, fraud

Ellison was not only sentenced to 24 months in prison by the US District Court in Manhattan's Judge Lewis A Kaplan, but she was required to forfeit her $11 billion for her role in the collapse of FTX and the loss of millions in funds for customers. She testified against Bankman-Fried, the founder of both FTX and Alameda and a major Democrat donor who followed principles of "Effective Altruism," for three days during his November 2023 trial. Bankman-Fried is serving 25 years in federal prison for his crimes.

Her testimony was key to the prosecution's case against Bankman-Fried. The two were reportedly part of a polycule as they lived and worked in a $40 million penthouse in the Bahamas. There were apparently 8 others involved in the lifestyle. Ellison was CEO of a sister company to FTX, Alameda Research. Much of Alameda's holdings were in FTX's proprietary cryptocurrency, which led to a higher valuation for the coin.

That higher valuation was used to prop up FTX, which was also lending money to Alameda, and the higher valuation of the currency made it seem like Alameda was worth more than it was, as well. When customers who had holdings in FTX looked to cash out after concerns were raised by competitor Binance, the FTX didn't have the money and there was essentially a run on FTX.

Ellison's lawyers claimed "that Bankman-Fried forced her into a sort-of isolation that culminated in her moral compass being 'warped.' They said at his direction, Ellison helped 'steal billions' while living 'in dread, knowing that a disastrous collapse was likely, but fearing that disentangling herself would only hasten that collapse," NBC reported.

Ellison pleaded to seven counts, including engaging in conspiracy to commit wire fraud on customers of FTX, aiding and abetting same, engaging in conspiracy to commit wire fraud on lenders of Alameda Research, aiding and abetting same, conspiracy to commit commodities fraud, to commit securities fraud, and conspiracy to commit money laundering.

Two others who worked with Ellison and Bankman-Fried, Nishad Singh and Gary Wang, will also be sentenced this fall. Ryan Salame was sentenced in May to seven and a half years in prison and was required to pay $11 million in forfeiture and restitution.