Caroline Ellison Fine: Ex-Alameda Research Head Will Forfeit $11B, Restitution May Follow

Key Takeaways

• Caroline Ellison received a two-year sentence and an order to forfeit $11 billion.
• She played a central role in diverting billions of dollars in customer funds from FTX.
• Ellison agreed to pay substantial financial settlements to resolve the legal issues arising from the FTX fraud.

Caroline Ellison, a former executive at Alameda Research and a key witness in the prosecution of Sam Bankman-Fried, has been sentenced to two years.

Additionally, Ellison has been ordered to forfeit $11 billion, a substantial portion of which is believed to come from her holdings in the AI startup Anthropic.

The sentence was harsher than the recommendation from the federal Probation Department. The latter suggested a three-year supervised release without any prison time.

Ellison, who served as CEO of Alameda Research, played a central role in the scheme to divert billions of dollars in customer funds from FTX for personal use and to prop up Alameda’s trading operations.

Shares in Anthropic Necessary for Settlement

Judge Lewis Kaplan praised  Ellison for her significant contribution to the prosecution of Bankman-Fried, highlighting the seven fake spreadsheets she provided as crucial evidence. Ellison’s cooperation led to a substantial reduction in her sentence.

On Monday, Ellison’s attorneys announced that they had finalized financial settlements with prosecutors and the FTX debtor’s estate. While the exact amounts have not been disclosed, it’s known that Ellison’s holdings in the AI startup Anthropic, which have appreciated significantly, form a substantial portion of the settlement.

Ellison’s cooperation and the subsequent financial settlements demonstrate her efforts to rectify the damage caused by the FTX fraud.

Judge’s Comments

Judge Lewis Kaplan acknowledged that Ellison was a victim of Bankman-Fried’s fraudulent scheme. He instructed her to mislead lenders and make risky investments with stolen customer funds.

As CEO of Alameda Research, Ellison was complicit in misusing $8 billion of FTX customer funds for personal ventures, including venture investments, political donations, and real estate purchases.

Ellison pleaded guilty to charges of wire fraud and money laundering as part of a plea deal. Additionally, she may pay further restitution to compensate for the fraud’s damages. But, so far, the amount remains unclear.

About the Author

Giuseppe Ciccomascolo

Giuseppe Ciccomascolo began his career as an investigative journalist in Italy, where he contributed to both local and national newspapers, focusing on various financial sectors. Upon relocating to London, he worked as an analyst for Fitch's CapitalStructure and later as a Senior Reporter for Alliance News. In 2017, Giuseppe transitioned to covering cryptocurrency-related news, producing documentaries and articles on Bitcoin and other emerging digital currencies. He also played a pivotal role in establishing the academy for a cryptocurrency exchange website. Crypto remained his primary area of interest throughout his tenure as a writer for ThirdFloor.

See more

[email protected] LinkedIn