Former co-CEO of Alameda Research Caroline Ellison was sentenced on Tuesday to two years for her role in the collapse of crypto exchange FTX which caused consumers to lose billions of dollars. 

Ellison, who is also the ex-girlfriend of former FTX CEO Sam Bankman Fried, pled guilty in December 2022 to two counts of conspiracy to commit wire fraud, two counts of actual wire fraud, one count of conspiracy to commit commodities fraud, one count of conspiracy to commit securities fraud and one count of conspiracy to commit money laundering. Alameda Research had close ties to FTX, and both were founded by Bankman-Fried.

Ellison addressed the court on Tuesday and said she wanted to apologize to those who lost money because of her actions. She said “not a day goes by that I don’t think about all of the people I hurt,” according to reporting from Bloomberg. 

Ellison cooperated with the government and testified against Bankman-Fried during his criminal trial earlier this year. Ellison told the court in March that Bankman-Fried directed her to commit the crimes that led to the exchange's downfall. Ellison said Alameda had access to customer deposits through an unlimited line of credit and also had direct access to customer deposits that were sent to Alameda's bank account known as "fiat@". 

During Bankman-Fried's criminal trial, Ellison also admitted to sending balance sheets to banks at Bankman-Fried’s direction that made Alameda’s position look less risky than it really was. 

Judge Lewis Kaplan, who also oversaw Bankman-Fried’s sentencing, said on Tuesday that the difference between Bankman-Fried and Ellison is that she cooperated while “he denied the whole thing,” Bloomberg also reported. 

Ellison's attorneys previously asked the court not to impose jail time due to her cooperation. Her attorney cited the federal Probation Department's recommendation of a sentence of time served with three years of supervised release. 

"Given the Probation Department’s recommendation for just three years of supervised release and time served, it seems the government recognizes her cooperation and significant role as a witness against Sam Bankman-Fried (SBF). However, the nature of her involvement in the FTX scandal still carries weight in sentencing decisions," said Braden Perry, partner at Kennyhertz Perry and a former federal enforcement attorney, in an emailed statement to The Block ahead of Ellison's sentencing. 

Perry said Ellison's cooperation was likely the "primary driver" behind the Probation Department's recommendation. 

"Still, the judge is not bound by this recommendation and can impose a more severe sentence if deemed appropriate," Perry said. 

The collapse of FTX led to "massive public distrust," Perry added, so the judge might feel the need to send a message.

"While her cooperation is valuable, there’s also a desire to hold key players accountable, especially given the scale of losses to investors and consumers," Perry said. 

Ahead of the sentencing, Samson Enzer, partner at Cahill, Gordon & Reindel, said Judge Lewis Kaplan would want to give Ellison a lighter sentence given her cooperation. Enzer was also a federal prosecutor in the U.S. Attorney's Office for the Southern District of New York, where he handled multiple crypto-related cases.

"Judge Kaplan imposed a stiff 25-year prison sentence on SBF in large part to deter others from emulating SBF’s crime, and by the same token, Judge Kaplan will want to give cooperating witnesses like Ellison lenient sentences to encourage others to cooperate with future government investigations," Enzer said. 

Other former FTX executives, Gary Wang and Nishad Singh, were also charged but have also cooperated with prosecutors. Wang's sentencing is set for Nov. 20, while Singh's will take place on Oct. 30. Bankman-Fried was sentenced to nearly 25 years in prison in March and ordered to pay back up to $11 billion in investor and lender losses.  

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