Caroline Ellison, key witness in FTX case, should get lenient sentence, prosecutors say

Caroline Ellison, a close associate of disgraced cryptocurrency magnate Sam Bankman-Fried, provided “extraordinary cooperation” to the government, federal prosecutors said Tuesday, indicating she should receive a lenient sentence for her role in the massive fraud that led to the collapse of the FTX cryptocurrency exchange.

Ms. Ellison, 29, who was also Mr. Bankman-Fried’s on-again, off-again girlfriend, pleaded guilty to fraud along with two other members of his inner circle shortly after FTX collapsed in November 2022. In a court filing this month, Ms. Ellison’s defense lawyers asked the judge overseeing the case, Lewis A. Kaplan, to sentence her to three years of probation, with no jail time.

In the government’s filing Tuesday, prosecutors advised the judge not to impose a specific sentence, but noted that her cooperation was “not only substantial but exemplary.”

Ms. Ellison was the star witness at Mr. Bankman-Fried’s trial last fall in federal court, where she spent nearly three days on the stand. She described an incriminating spreadsheet that Mr. Bankman-Fried had used to deceive business associates and recounted the final days of FTX, holding back tears as she delivered some of the trial’s most emotional testimony.

Mr. Bankman-Fried was convicted of a sophisticated fraud that siphoned off $8 billion from customer accounts to finance venture investments, political donations and other expenditures. He was sentenced in March to 25 years in prison.

Judge Kaplan is expected to determine Ms. Ellison’s sentence in a federal court in Manhattan on September 24.

“In her many meetings with the government, Ellison approached her cooperation with remarkable candor, remorse, and seriousness,” prosecutors wrote in their 14-page memo to Judge Kaplan. “And she persevered despite harsh media and public scrutiny and Bankman-Fried’s efforts to publicly weaponize her personal writings to discredit and intimidate her.”

In the defense memorandum filed a week ago, Ms. Ellison’s lawyers wrote that she had accepted responsibility for her role in the fraud and that the federal probation service had recommended that she not serve any prison time.

“She deeply regrets her role and will carry shame and remorse with her to her grave,” the lawyers wrote.

Ms. Ellison graduated from Stanford and began working with Mr. Bankman-Fried in 2018 when she moved to Berkeley, California, to join Alameda Research, a crypto hedge fund he founded.

Over the next few years, she followed Mr. Bankman-Fried around the world—first to Hong Kong, then to the Bahamas—as he became an international celebrity and built FTX and Alameda into a crypto empire.

In their sentencing memo, Ms. Ellison’s lawyers detailed the often stormy romantic relationship between their client and Mr. Bankman-Fried. For years, they wrote, Ms. Ellison was virtually in his grasp, living in a social “bubble” centered on Mr. Bankman-Fried. At his suggestion, Ms. Ellison began taking Adderall so she could work more hours, the memo said.

Mr. Bankman-Fried initially suggested “that their liaison would develop into a full-blown relationship,” the lawyers wrote. “But after a few weeks, he allegedly ‘ghosted’ Caroline without explanation.”

Ms. Ellison once asked Mr. Bankman-Fried if she could go with him to New York for the Met Gala at the Metropolitan Museum of Art, the memo said. He replied that he did not want to be seen with her in public.

Ms. Ellison “repeatedly considered leaving Alameda,” the memo said. “But Mr. Bankman-Fried convinced her to stay, telling her she was essential to the business’s survival and that he loved her.”

After FTX collapsed, Ms. Ellison admitted to prosecutors that she had conspired with Mr. Bankman-Fried to steal billions of dollars in customer deposits. She became the subject of public fascination, mobbed by photographers as she arrived in court to testify against him. “The government cannot think of any other cooperating witness in recent history who has been subjected to more scrutiny and intimidation,” prosecutors wrote on Tuesday.

Since pleading guilty, Ms. Ellison has struggled to find paid work, according to her lawyers’ memo. She was turned down for a job at a charity that promoted math education for young women. At one point, she got a job helping low-income families prepare tax returns; a few weeks later, she was asked to leave after the employer found out who she was, according to a letter from her aunt that was included in the sentencing memo.

Ms. Ellison has volunteered more than 700 hours with community organizations, taught adult literacy classes and fostered shelter dogs, the memo said. She is working with her parents, who both teach at the Massachusetts Institute of Technology, on a math enrichment book for advanced high school students and has written a novella set in Edwardian England.

Ms. Ellison also has a new romantic partner, who has “quietly supported her over the past year,” according to a letter from a friend, Leila Clark.

“I was very happy for her,” Mrs. Clark wrote. “He was a huge improvement over her ex.”

Benjamin Weiser contributed to the reporting.