FTX fraudster Caroline Ellison starts her 2-year prison term in Connecticut

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Caroline Ellison, former CEO of Alameda Research and key witness against FTX founder Sam Bankman-Fried, reported to a low-security federal prison in Connecticut on Thursday, according to a CNBC report.

Ellison received a two-year prison sentence in September and was ordered to forfeit $11 billion for her role in the fraud and conspiracy that led to the collapse of the crypto exchange formerly valued at $32 billion.

Despite the Federal Probation Department and defense lawyers requesting no prison time, Judge Lewis Kaplan determined incarceration was necessary to deter future fraud.

However, he acknowledged Ellison’s extensive cooperation with prosecutors, which helped secure Bankman-Fried’s conviction.

As head of Alameda Research, FTX’s sister hedge fund, Ellison oversaw operations that received a significant portion of the $8 billion in customer funds misappropriated from FTX.

These funds were used for Alameda’s trading activities and other purposes.

“I’ve seen a lot of cooperators over the years and I’ve never seen one quite like Miss Ellison,” said Kaplan, who noted her genuine remorse and the emotional toll of her cooperation.

He also called FTX “the greatest financial fraud perpetrated in the history of the US.”

Ellison secured a plea deal in December 2022, pleading guilty to conspiracy and financial fraud charges.

At her sentencing, she tearfully apologized to those she had harmed and expressed deep shame, saying she regretted not walking away from FTX and Bankman-Fried.

Bankman-Fried, who chose to go to trial, was convicted on all seven criminal fraud charges and received a 25-year prison sentence in March, along with an $11 billion forfeiture order.

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