FTX Caroline Ellison to leave federal prison earlier than expected
Caroline Ellison, the former CEO of Alameda Research and a former partner of Sam Bankman-Fried, was transferred to joint custody after serving part of a sentence related to the $11 billion fraud that led to the collapse of FTX.
In short
- Caroline Ellison was moved from a federal prison to a community prison after serving part of her sentence related to the FTX collapse.
- Prosecutors acknowledged his cooperation, which contributed to a reduced sentence, while Sam Bankman-Fried remains in custody.
- FTX’s creditors continue to collect more than $16 billion in bankruptcy payments.
Caroline Ellison was transferred from a federal prison
Caroline Ellison was transferred from federal prison to community custody after serving approximately 11 months of her two-year sentence related to the FTX collapse.
According to Federal Bureau of Prisons documents he reviewed Business InsiderEllison was transferred on October 16 from the Federal Correctional Institution in Danbury, Connecticut. He is now under house arrest or a halfway house.
His release date is currently set for February 20, 2026, almost nine months before his original sentence expires. Ellison began serving her sentence in early November 2024 after US federal judge Lewis Kaplan sentenced her to two years in prison.
Cooperation played a key role in shortening the sentence
In December 2022, Caroline Ellison pleaded guilty to several charges, including conspiracy to commit wire fraud, money laundering, securities fraud, and commodities fraud. These crimes theoretically carried a maximum total sentence of 110 years in prison.
At his sentencing, Judge Kaplan highlighted Ellison’s “substantial” cooperation with prosecutors and recalled that the seriousness of the facts nevertheless warranted a prison sentence.
At a hearing in September 2024, Ellison expressed remorse and acknowledged the harm caused to customers and investors.
Prosecutors called his testimony key to the case against Sam Bankman-Fried. Without his cooperation, they say, it would have been much more difficult to determine the structure and intent of the fraud.
Ellison testified against Sam Bankman-Fried
Caroline Ellison stepped into the spotlight as a witness during the criminal trial of Sam Bankman-Fried in October 2023. Over three days, she described how the former FTX CEO allegedly ordered executives to embezzle customer funds.
According to his testimony, Bankman-Fried directed Alameda Research to invest billions of dollars from FTX customers while internal systems hid the transfers from the public.
She also reflected on their personal relationship, explaining that she often felt pressured and succumbed to Bankman-Fried because of his influence and authority in the company.
Different results for other FTX leaders
Other former FTX executives have experienced varying legal outcomes. Former CTO Gary Wang and former director of engineering Nishad Singh were given suspended sentences with probation. Both cooperated with prosecutors and testified against Bankman-Fried.
Conversely, former FTX Digital Markets CEO Ryan Salame is currently serving a seven-year sentence in a Maryland prison. He pleaded guilty to offenses relating to political campaign finance and operating an unlicensed money transfer business. Salame refused to cooperate and publicly criticized the leniency granted to cooperating witnesses.
Sam Bankman-Fried is serving a 25-year sentence in a federal prison in California. He was found guilty of all seven counts of fraud and conspiracy and appealed, claiming he had not received a fair trial. His family also requested a presidential pardon. Bankman-Fried continues to maintain that FTX was never insolvent and claims that customers could have been refunded in full.
FTX bankruptcy distribution continues
FTX’s creditors continue to receive bankruptcy payouts totaling more than $16 billion in recoveries. A spokesman for the Federal Bureau of Prisons declined to comment on the exact conditions of Ellison’s community detention, citing privacy and security concerns. Ellison’s legal team did not respond to media requests.
The update comes as Sam Bankman-Fried reiterated that FTX was never insolvent and blamed bankruptcy lawyers and trustees for wiping out more than $100 billion in value.
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Louis Blümlein has been analyzing the crypto market for several years. Focuses on business strategies, market trends and economic developments to identify and capitalize on early stage market opportunities.
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The comments and opinions expressed in this article are solely those of the author and should not be considered investment advice. Before making any investment decision, do your own research.