Caroline Ellison Sentencing Timing: How, Where to Follow as SBF’s Ex Learns Fate Over Role in FTX Demise

Key Takeaways

• Caroline Ellison’s cooperation with prosecutors could lead to a lighter sentence.
• The former Alameda Research chief will likely receive minimal or no prison time for her testimony.
• Ellison’s legal team is pushing to redact sensitive information from her sentencing documents

Months after rendering “extraordinary cooperation with the government” that helped bring down several top FTX executives and secure a 25-year prison sentence for her former partner, Sam Bankman-Fried (SBF), Caroline Ellison will soon learn her fate.

The former Alameda Research chief is scheduled to appear in a New York court on Sept. 24. In the run-up, her lawyers are urging the court to seal sensitive information from the hearing, arguing that disclosure would only exacerbate the harassment she has faced.

Sentence Is Coming

Caroline Ellison is scheduled to be sentenced on Sept. 24 in the same New York courthouse where Sam Bankman-Fried was recently tried.

Ellison, who cooperated with federal authorities from the outset, is expected to receive a substantial reduction in her sentence due to her guilty plea and cooperation. In a letter to Judge Lewis Kaplan, prosecutors highlighted Ellison’s “extraordinary” assistance in their case, stating that it would have been difficult to prove the charges without her testimony.

While the Justice Department and Ellison’s lawyers have not yet filed sentencing briefs, Ellison’s legal team has requested that certain information be redacted from their brief, including the names of character witnesses, personal details, and information about her volunteer activities.

Where to Follow

Caroline Ellison’s sentencing will occur behind closed doors, as cameras won’t enter the courtroom. The judge’s decision will only be public after the sentencing hearing.

Additionally, certain details from Ellison’s sentencing memo, including the names of character witnesses, medical information, and personal details, will remain confidential.

Ellison’s legal team requested that this information be redacted to protect her and her supporters’ privacy. They argued that Ellison has been the subject of intense media scrutiny and online harassment and that her friends should not be subjected to similar treatment.

Judge Lewis Kaplan granted the motion to redact this information but allowed third parties to request access to the names of character witnesses. Inner City Press, a media outlet, has already opposed this request. It cited a previous case where documents revealed the names of guarantors for Sam Bankman-Fried’s bail.

Ellison’s Cooperation May Bring a Lighter Sentence

As Caroline Ellison stands on the precipice of her sentencing hearing, her collaboration with prosecutors may prove to be the lifeline that saves her from a crippling penalty.

Ellison’s lawyers are pushing for a lenient sentence in a last-ditch bid to sway the court. They cite her “extraordinary cooperation with the government” and the relatively minor spoils she reaped from her involvement in the FTX debacle.

Ellison’s lawyers paint a picture of an executive who, though embroiled in serious wrongdoing, never sought to line her own pockets.

They argue that she refrained from taking out large loans and held a small stake in FTX, less than 1%.

“While Caroline committed serious crimes to further Mr. Bankman-Fried’s interests, she notably did virtually nothing to protect her own,” the filing stated, a tacit acknowledgment that her loyalty to her former boss and romantic partner was her greatest sin.

A lighter sentence for Ellison would mark a contrast to the 25-year prison term handed down to Bankman-Fried, who had sought to silence her through intimidation and blackmail during his time on bail.

Meanwhile, other former FTX executives, including Gary Wang and Nishad Singh, will face sentencing in the coming weeks.

Ellison’s Desperate Bid for Anonymity

In addition to requesting a lighter sentence, Ellison’s lawyers have launched an eleventh-hour appeal to New York Judge Kaplan, urging him to redact sensitive information from her sentencing documents.

The request, filed on Sept. 9, seeks to protect the identities of those who have penned letters of support on her behalf, as well as her medical history and living arrangements, from the public’s prying eyes.

According to the filing, the request is in line with judicial guidelines that prioritize the protection of innocent third parties. The court filing noted that “the privacy interests of innocent third parties should weigh heavily against disclosure in a court’s balancing equation.”

To bolster their case, the defense team cites precedents where judges granted similar requests for confidentiality, underscoring that such measures are neither unprecedented nor unreasonable.

They also highlight the media frenzy surrounding Ellison since news of her association with Bankman-Fried surfaced, including the unseemly spectacle of headlines dissecting her personal life.

In a thinly veiled swipe at her former partner, Ellison’s lawyers also reference the fact that Bankman-Fried himself had essayed to release her private information to the media—a brazen attempt to besmirch her reputation and intimidate her into silence.

By seeking to protect her personal life, Ellison’s lawyers are, in effect, drawing a line in the sand and refusing to let her former associates wage a war of attrition against her in the court of public opinion.

Where Will Ellison Serve Her Time if Convicted?

Ellison had already entered a guilty plea as part of her agreement to cooperate with authorities.

Cooperative witnesses frequently receive leniency, particularly if they assist the government in catching larger fish, such as Bankman-Fried.

Several criminal defense attorneys following the case have predicted Ellison will unlikely receive a significant prison sentence.

Considering her testimony, she may not get one at all. This stands in stark contrast to the decades-long prison term Bankman-Fried faces .

Much like the lawyers predicted, the prosecution has already filed a letter with the court, highlighting the importance of her cooperation. While judges usually don’t care about such recommendations, they often take them into consideration. This, in part, incentivizes other witnesses to come forward and provide valuable testimony.

If convicted, Ellison might end up in the same prison as fellow white-collar offender Martha Stewart . Ellison could also stay in the women-only FPC Alderson, also known as “Camp Cupcake.” FPC Bryan is the only other stand-alone federal prison camp for women in the US.

Experts Predict Ellison’s Sentence, Many Expect Leniency

Justin Paperny , a former UBS Group AG broker who served an 18-month sentence for fraud, believes that if Ellison goes to jail, it would be for a short time. She may go to a minimum-security facility for non-violent offenders.

However, even if she avoids jail time, Ellison may still face other forms of punishment. She may have to reimburse the victims for their losses and return funds gained through deception. Given the government’s claim that FTX clients are losing billions , this could impose a substantial financial burden.

Tim Howard, a former federal prosecutor in Manhattan, stated: “If you are joining Team USA, you have to make financial remuneration consistent with the facts. On that, you don’t get off easy.”

Paperny remarked: “They’re very aggressive in collecting. The money from the sale or refinance of your home goes to the government, so you are unable to do either.”

Chris Rice, a partner at the tech executive recruitment agency Riviera Partners, said the risk was “too high.” He added: “I don’t think they’ll be able to function within an organization at the same level as they did in the past.”

Sealed by Ellison’s Damning Testimonies

Sam Bankman-Fried

Sam Bankman-Fried , the embattled former cryptocurrency magnate, will spend 25 years in prison.

During the month-long trial of Bankman-Fried in October 2023, the prosecution presented testimony from over a dozen witnesses, in stark contrast to the defense’s three. Among the most compelling evidence was testimony from several FTX executives, notably including Caroline Ellison.

The prosecution argued that billions of FTX customer funds illicitly went to Alameda Research, Bankman-Fried’s trading firm, to settle substantial loans acquired from cryptocurrency lenders.

As the CEO of Alameda Research, Ellison’s testimony was particularly damning. She admitted that Alameda had indiscriminately used FTX’s deposits for various needs under Bankman-Fried’s instructions, which included committing financial misdeeds.

One specific instance Ellison highlighted was Bankman-Fried’s directive to prepare seven different balance sheets to deceive Genesis. The latter was a primary lender to Alameda when it demanded repayment of a $500 million loan.

According to Ellison’s testimony, the duo decided on a fabricated balance sheet that significantly downplayed Alameda’s debts. The sheet also omitted any reference to borrowing from FTX customer funds.

Ellison revealed that, throughout its operation, Alameda misappropriated approximately $14 billion from FTX customers, underscoring the magnitude of the alleged financial misconduct.

Deltec Bank

Deltec Bank and Trust, a Bahamian bank with deep ties to the cryptocurrency industry, received allegations of playing a pivotal role in misallocating FTX customer deposits to Alameda Research.

The lawsuit , fueled by damning messages and testimonies from Ellison, exposed Deltec’s alleged complicity in the scheme.

As part of her settlement, Ellison revealed that Deltec provided billions in credit to support the issuance of the stablecoin Tether, entangling the bank in the web of deceit that ultimately led to FTX’s downfall.

The bank’s questionable dealings, including its long history of serving as a key banking partner for Tether and publicly vouching for the stablecoin’s reserve value, have now come under intense scrutiny, raising serious concerns about its role in the scandal.

With additional reporting from Prashant Jha and Giuseppe Fabio Ciccomascolo.