Sam Bankman-Fried’s ex-girlfriend handed two-year prison sentence for FTX fraud

Caroline Ellison, the ex-girlfriend of FTX founder Sam Bankman-Fried, has been sentenced to two years in prison for her role in the $8bn (£6bn) fraud that triggered the implosion of the cryptocurrency exchange.

Ellison, 29, was given a prison sentence on Tuesday night at a hearing in Manhattan, even though the judge recognised her extensive cooperation with prosecutors.

She had pleaded guilty to seven felony counts of fraud and conspiracy.

US district judge Lewis Kaplan said that he was not comfortable with remorse and cooperation being a “get out of jail free card” in a case so serious.

Prosecutors have called Bankman-Fried’s actions one of the biggest financial frauds in US history.

She had testified as a prosecution witness in the trial of Bankman-Fried, who was convicted of fraud and other charges last year and is serving a 25-year prison sentence arising from FTX’s November 2022 collapse.

The crimes to which she pleaded guilty carried a maximum sentence of 110 years in prison. Her lawyers had argued that Ellison should get no prison time due to her cooperation, and prosecutors sought leniency as well.

The judge told Ellison she was “gravely culpable in this fraud - there is no doubt about it”, though he said her “remarkable cooperation” represented a “fundamental distinction” between her and Bankman-Fried.

“There’s no way you’re ever going to do something like this again, I am persuaded,” the judge told Ellison. “But here’s the thing: this was, if not the very greatest financial fraud ever perpetrated in this country or anywhere else, close to it.”

Ellison had told the court: “Not a day goes by when I don’t think about all the people I hurt. My brain can’t even truly comprehend the scale of the harms I’ve caused. That doesn’t mean I don’t try.”

Bankman-Fried, 32, rode a boom in cryptocurrency prices during the Covid pandemic to an estimated net worth of $26bn by October 2021. He gained prominence as a generous donor to philanthropic causes and Democratic politicians.

His wealth evaporated when FTX collapsed in November 2022 amid a flurry of customer withdrawals.

Bankman-Fried was charged a month later with stealing FTX customer funds to plug losses at Alameda Research, a cryptocurrency-focused hedge fund, which Ellison ran from 2021 to 2022.