Caroline Ellison Shouldn't Go to Jail After FTX Collapse, Attorneys Say

The former Alameda Research CEO testified against her former boss, Sam Bankman-Fried, last year.

Former Alameda Research CEO Caroline Ellison should be sentenced to time served and supervised release for her role in FTX's operation and subsequent collapse, her attorneys said in a filing late Tuesday night.

Ellison, one of FTX founder Sam Bankman-Fried's top lieutenants, testified against him at his trial last year, where he was convicted on seven counts of fraud and conspiracy. Ellison had previously pleaded guilty to fraud tied to FTX's operation shortly after the exchange filed for bankruptcy in the fall of 2022. In Tuesday night's filing, her attorneys noted that the Probation Department had filed a presentence report recommending three years of supervised release due to her "extraordinary cooperation with the government" and the character testimonials accompanying the submission. The presentence report also recommended that Ellison not be fined.

"[Ellison] poses no risk of recidivism and presents no threat to public safety. It would therefore promote respect for the law to grant leniency in recognition of [Ellison's] early disclosure of the crimes, her unmitigated acceptance of responsibility for them, and – most importantly – her extensive cooperation with the government," the filing said.

The document outlined Ellison's childhood, college and early career, including meeting Bankman-Fried at Jane Street and eventually joining Alameda Research, Bankman-Fried's first company.

Ellison began taking Adderall and had an on-again, off-again relationship with Bankman-Fried during her time at Alameda (which the document described as Bankman-Fried repeatedly ghosting her), the attorneys said. As part of her role at Alameda, she became isolated from friends when she moved to Hong Kong shortly before COVID lockdowns shuttered travel between there and the U.S.

The sentencing submission was accompanied by diary entries, statements about her cooperation with FTX's bankruptcy estate and letters from former colleagues, friends and family. Some of these names have been redacted, though Inner City Press has requested that the court at least allow a hearing to argue for unredacting these names. Ellison's attorneys said in an initial filing that the people who wrote the letters are at risk of harassment or doxing, and at least one letter said it was written by another former Alameda Research employee.

John J. Ray III, the CEO of the FTX bankruptcy estate, wrote that Ellison's assistance was "valuable" in helping his team take over the exchange as it was falling apart, and that the estate was close to a settlement with Ellison where she would "turn over ... substantially all of her remaining assets" and continue assisting the bankruptcy team in restructuring FTX and its affiliated entities.

Similarly, attorneys who filed class action lawsuits against FTX's former executives said she "provided valuable assistance" to help them recover funds for FTX's creditors. Robert Cleary, the court-appointed examiner, also wrote a (brief) message saying Ellison was helpful.

Ellison's diary entries – a select few pages anyway – also lay out her thought process during her time at Alameda, describing her mood, how work and her relationship with Bankman-Fried affected her and her thoughts on how to improve her life (taking a day off work, going outside, keeping in touch with friends and reducing her Adderall dosage, among other possible remedies).

Ellison is scheduled to be sentenced on Sept. 24, 2024, in the same courthouse where Bankman-Fried went on trial. Fellow FTX executives Nishad Singh and Gary Wang will also be sentenced this year, in October and November.

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