Caroline Ellison, a former top executive at Sam Bankman Freed's fallen cryptocurrency empire FTX, was convicted of fraud on Tuesday and could face several years in prison, but prosecutors said she should receive leniency because of her “exceptional cooperation” in investigating the company.
Ellison, 29, pleaded guilty nearly two years ago and testified against Bankman-Freed for nearly three days at his trial last November.
In court filings, prosecutors said her testimony was “the linchpin in the case” against Bankman Freed, 32, who was convicted of fraud and sentenced to 25 years in prison.
Ellison's lawyers asked the court for a light sentence, citing both the testimony at trial and the trauma of his on-and-off romantic relationship with Bankman Freed, but also stressed that Ellison was not trying to avoid responsibility for his crimes.
“Caroline does not blame anyone else for her actions,” her lawyers wrote in court documents. “She deeply regrets her role and will carry her shame and remorse to her grave.”
FTX was one of the world's most popular cryptocurrency exchanges, known for its Super Bowl TV ads and extensive lobbying in Washington, until its bankruptcy in 2022.
U.S. prosecutors have charged that Bankman Freed and other executives looted funds from the exchange's client accounts, made risky investments, made millions of dollars in illegal political contributions, bribed Chinese officials and bought luxury real estate in the Caribbean.
Ellison is the CEO of Alameda Research, a crypto hedge fund managed by Bankman Freed that was used to handle some of the client funds from FTX.
Her lawyers wrote in court documents that her working relationship with Bankman Freed was complicated by her romantic feelings for him.
“From the beginning, Mr. Bankman Freed's behavior was erratic and manipulative. He initially professed strong feelings for Caroline and suggested their relationship was developing into a full-fledged romance. But after a few weeks, he 'ghosted' Caroline without explanation, avoiding her outside of work and refusing to respond to non-work-related messages,” her lawyers said.
As the business began to fail, Ellison revealed the massive fraud to employees even before FTX filed for bankruptcy, her lawyers wrote.
Finally, she also spoke extensively with U.S. investigators.
“Mr. Ellison cooperated at great personal and professional cost to himself, enduring intense media and public scrutiny and attempts by Bankman Freed to tamper with his witnesses,” prosecutors wrote.
She has spoken openly about her misconduct and is “uniquely positioned to explain not only the nature and history of Bankman Freed's crimes but also the reasons for them,” they said.
“In his numerous meetings with the government, Ellison approached his collaboration with remarkable candor, reflection and seriousness,” they wrote.
“She dedicated herself to an extensive document review that helped identify critical corroborating documents in an investigation that was hampered by Bankman Freed's systematic destruction of evidence.”
They said her testimony at trial was credible and persuasive.
Judge Lewis A. Kaplan will set the sentence.
Since testifying at Bankman-Freed's trial, Ellison has become active in charitable work, written a novel and worked with his parents on a new math textbook for high school students, his lawyers said.
She said she is now in a healthy romantic relationship and worked for Bankman Freed from 2017 until late 2022, and dated him on and off, but has reconnected with friends from high school with whom she had lost contact during that time.
