Caroline Ellison, the former CEO of Alameda Research, has been sentenced to two years in prison, despite cooperating in the investigations surrounding Sam Bankman-Fried (SBF) and the collapse of FTX.
Her role in the downfall of the crypto exchange and related activities led to the sentencing, even though she provided significant assistance in building the case against SBF.
Ex-Alameda CEO Sentenced to 2 Years in Prison
Caroline Ellison, the former CEO of Alameda Research, was sentenced to 24 months in prison by a Manhattan court. Despite her cooperation in the case, Judge Lewis Kaplan highlighted the severity of the crimes involved.
Ellison had pleaded guilty to seven charges tied to the collapse of FTX in late 2022. She admitted to conspiring with Bankman-Fried in the misappropriation of billions in customer deposits.
Despite the federal Probation Department’s recommendation for no prison time and the prosecutors’ push for leniency, Judge Kaplan determined that the scale of the fraud required a prison sentence. He acknowledged Ellison’s cooperation but highlighted that it did not excuse her from responsibility.
“I’ve seen a lot of cooperators in 30 years. I’ve never seen one quite like Ms. Ellison,” Kaplan said.
Read more: FTX Collapse Explained: How Sam Bankman-Fried’s Empire Fell
As Ellison starts her prison sentence, Sam Bankman-Fried is fighting his conviction. His legal team filed an appeal earlier this month, accusing the trial judge of bias. They argue that restrictions on presenting evidence hampered Bankman-Fried’s defense, resulting in an unfair trial.
The appeal also argues that the judge blocked crucial points, including the possibility that FTX users could recover their funds through bankruptcy, which they say distorted the case by implying irreversible losses. Bankman-Fried’s lawyers are pushing to have the conviction overturned and are calling for a new trial with a different judge.
The now-defunct FTX is working toward reimbursing its customers, with one strategy involving the use of stablecoins for repayments. However, the US Securities and Exchange Commission (SEC) has stated it will oppose any repayment plan that involves returning funds to creditors in cryptocurrency.
The exchange has recently settled its $600 million dispute with Emergent Technologies over Robinhood shares. The US Department of Justice seized the shares in January 2023, following the exchange’s collapse in November 2022. On September 1, 2023, Robinhood repurchased the shares for roughly $606 million.
Read more: Crypto Regulation: What Are the Benefits and Drawbacks?
As part of the settlement, Emergent Technologies, co-founded by Sam Bankman-Fried, will receive $14 million from FTX to cover administrative costs. In return, the firm dropped its claim for 55 million Robinhood shares and cash. The contested shares involved multiple parties, including FTX, BlockFi, Sam Bankman-Fried, and Emergent Technologies.
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