FTX’s Caroline Ellison reports to prison to begin 2-year sentence

Caroline Ellison, the star witness in the prosecution of FTX founder Sam Bankman-Fried, reported to a low-security federal prison in Connecticut on Thursday, according to a spokesman for the Bureau of Prisons.

In September, Ellison was sentenced to two years in prison and ordered to forfeit $11 billion for her role in the massive fraud and conspiracy that doomed the cryptocurrency exchange once valued at $32 billion.

The federal Probation Department had recommended that Judge Lewis Kaplan sentence Ellison to three years of supervised release, with no time behind bars. Defense lawyers also had requested a punishment that didn’t include prison time.

While Kaplan praised Ellison for her extensive cooperation with prosecutors — which led to the conviction of Bankman-Fried — the judge said her criminal sentence needed to deter other potential bad actors from committing fraud.

Ellison ran Alameda Research, which was a sister hedge fund of FTX. She was also romantically involved with Bankman-Fried.

Alameda received much of the $8 billion in customer funds looted by Bankman-Fried from FTX. The stolen money was used for Alameda’s trading operation and other purposes.

Ellison reached a plea deal with prosecutors in December 2022, a month after FTX spiraled into bankruptcy. She pleaded guilty to conspiracy and financial fraud charges.

Kaplan called FTX the greatest financial fraud perpetrated in the history of the U.S., and told the court in Manhattan during the sentencing that a “literal get-out-of-jail-free card I can’t agree to.”

“I’ve seen a lot of cooperators over the years and I’ve never seen one quite like Miss Ellison,” said Kaplan, who also said he believed that Ellison was genuinely remorseful for her crimes and that her cooperation carried a steep price for her emotionally.

Late last month, Former FTX executive Nishad Singh was sentenced to time served and three years of supervised release, becoming the fourth ex-employee of the collapsed crypto exchange to be punished. 

At her sentencing, Ellison read from a statement in a shaky voice while crying at times as she apologized to the people she had hurt and said she was deeply ashamed. She also said she was sorry for not being brave enough to walk away from FTX and Bankman-Fried.

Kaplan allowed Ellison to remain free on bail until surrendering to prison either on or after Nov. 7.

Bankman-Fried chose to stand trial and was convicted of all seven criminal fraud charges against him. He was sentenced to 25 years in prison in March and also was ordered to pay $11 billion in forfeiture by Kaplan.

Both Bankman-Fried and Ellison had faced the same statutory maximum sentence of about 110 years in prison for their crimes.

WATCH: FTX founder Sam Bankman-Fried appeals fraud conviction