SBF's right-hand woman praised for testimony – and jailed for two years

Caroline Ellison thanked for helping take down FTX supremo, ordered to surrender her own billions

The former CEO of Alameda Research, Caroline Ellison, has been sentenced to two years in a minimum-security prison after pleading guilty to helping her former boyfriend Sam Bankman-Fried siphon billions out of the FTX exchange.

Ellison admitted that she had falsified banking documents and drained customers' assets out of the FTX cryptocurrency exchange to cover the obligations of hedge fund Alameda Research. She pleaded guilty to two counts of wire fraud and five conspiracy counts, and cooperated fully with investigators against SBF to bring the super-crook to justice.

In three days of damning testimony in October last year, Ellison described how she and SBF agreed to use fake quarterly balance sheets to hide the billions that FTX was lending Alameda. SBF denied he had known about this, but Ellison provided the spreadsheets – and the metadata to show that he had perused them.

It showed how Alameda Research and FTX were intimately linked; the use of investors' funds totaling billions of dollars on the cryptocurrency exchange to bankroll risky investments made by Alameda; and the relationship between SBF and Ellison – all until FTX imploded.

"That was one of the huge pieces of evidence in this case," Judge Lewis Kaplan reportedly explained in New York federal court on Tuesday, with reference to Ellison's testimony about the spreadsheets. "That's cooperation. Mr. Bankman-Fried was the opposite."

The judge praised Ellison for singing like a canary, remarking that her candor and decisions not to shift blame or minimize her own role in the fraud was unique in his judicial experience.

Ellison faced a potential 110 years in prison, but both her lawyers and the prosecutors both argued that her extraordinary cooperation warranted a much more lenient sentence. They had recommended credit for the time she has spent in custody already, and three years of supervised probation.

The judge agreed that the maximum sentence was not appropriate, but argued that cooperating with authorities should not be "a get out of jail free card" given the magnitude of the fraud. He instructed that Ellison would still face a custodial sentence because she was "by no means free of culpability." She will also have to forfeit $11 billion of her FTX holdings – which she has made no attempt to withdraw – and will begin her sentence on November 7.

She has also accepted lifetime bans from financial trading and serving as director of a public company.

"You're a very strong person, Ms. Ellison, in some ways, but not inviolable," the judge added. "Mr. Bankman-Fried had your Kryptonite … You were vulnerable and you were exploited."

The sentence is not great news for Ellison's former colleagues – former CTO Gary Wang and former engineering chief Nishad Singh – who also cooperated with the authorities. Wang shared the code that gave Alameda preferential access to FTX funds and likely hoped for leniency.

After SBF's arrest at his home in the Bahamas, he tried to spin FTX's woes as a product of fluctuations in cryptocoin values, but the court was unimpressed by that argument. He is currently appealing his 25-year sentence after having been found guilty of six counts of fraud and one of money laundering. ®