The former cryptocurrency executive Caroline Ellison was officially granted the minimum sentence for her role in the $11 billion fraud scheme.
During her statement in court, Ellison broke down in tears saying,
"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 harm I've caused. That doesn't mean I don't try."
Ellion added that the two years at Alameda Research was a constant eating on her conscience. She had thought of leaving the organisation multiple times, but she would always hear Sam's voice in her head.
She regretted not having the courage to suppress her conscience and speak up against her boyfriend and the crimes that were happening within the organisation.
Punished by the public scrutiny and humiliation
The crux of the sentencing was pivoted on Ellison's role as the starwitness of the case. Both prosecutors and Ellison's lawyers fought long and hard for her to spend zero time behind bars.
According to the books, she could face a maximum sentence of 110 years in prison if she was found guilty of all charges. But of course, we know that isn't going to happen.
Ellison's lawyers took every chance to emphasise and stress that Ellison didn't shy away from the details, however embarrassing they were; even to the point of putting her private life on full display. For example, Ellison's relationship with Bankman-Fried and later, the expose of her private diary; lawyers argue that the excruciating public scrutiny and humiliation Ellison faced throughout this trial was the harshest punishment she could have got.
But U.S District Judge Lewis Kaplan said at a sentencing hearing at Manhattan federal court that while he cannot over state the importance of Ellison's testimony in convicting Bankman-Fried, he isn't comfortable with remorse and cooperation being a "get out of jail free card" in one of the biggest financial frauds in U.S history.
However, Judge Kaplan commended Ellison for feeling genuinely remorseful for her actions, unlike Bankman-Fried who was only sorry he got caught. Judge Kaplan said that he would recommend the Bureau of Prisons to place Ellison in a minimum-security prison near her parents' home in Boston, and that her sentence would begin in early November.
Cooperators normally get no prison time
Anjan Sahni, Ellison's lawyer were quick to argue otherwise, stating that sparing Ellison from prison time "would send a powerful message about the value of timely, honest and full cooperation with the government in cases of financial crime."
Joshua Naftalis, a former Manhattan federal prosecutor who oversaw securities fraud and cryptocurrency-related investigations, told Business Insiders in an interview that "typically though not guaranteed, people in Ellison's situation get no jail time, especially given how she has fully cooperated and received a glowing letter from prosecutors."
But he notes that while this is the standard protocol for most fraud cases; the sheer size of the fraud in the FTX makes it an exception compared to all of the other fraud cases out there.
Third person in the case to face prison time
Ellison is the third person in the case to face prison time. Kaplan previously sentenced Ryan Salame, a former FTX executive, to 7½ years in prison after he pleaded guilty to the charges against him. Unlike other witnesses, Salame did not cooperate in Bankman-Fried's trial. The sentence exceeded the prosecution’s recommendation, and now Kaplan is considering revoking Salame’s guilty plea, accusing him of perjury during an earlier court hearing.
Ellison's sentencing offers insight into what may be in store for Gary Wang and Nishad Singh, two other former FTX executives who pleaded guilty and testified against Bankman-Fried. Their sentencing hearings are set for later this fall.
“This sentence will set the standard,” Naftalis told Business Insider ahead of the hearing.
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