Caroline Ellison ‘knew’ Sam Bankman-Fried’s alleged fraud ‘was wrong’
Sam Bankman-Fried’s ex-girlfriend surprisingly admitted during a secret trial that she knew “it was wrong” to take part in his alleged fraud scheme, according to a transcript released Friday.
“I’m really sorry for what I did,” Caroline Ellison said. – I knew it was wrong.
Ellison, 28, pleaded guilty Monday to federal fraud charges related to her role as CEO of the Alameda Research hedge fund, which allegedly received billions of dollars from Bankman-Fried’s now bankrupt FTX cryptocurrency exchange.
Ellison admitted in Manhattan federal court that she “understood that many FTX customers invested in crypto derivatives and that most FTX customers did not expect FTX to lend their digital assets and fiat currency deposits to Alameda in this way.”[ads1];
FTX co-founder Gary Wang also pleaded guilty in the $8 billion collapse of FTX, and both he and Ellison are cooperating with the FBI, Manhattan U.S. Attorney Damian Williams revealed Wednesday.
Ellison pleaded guilty Monday to federal fraud charges.
FTX founder Sam Bankman-Fried was released on $250 million bond.
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Gary Wang also pleaded guilty.
FTX was founded in 2019.
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Bankman-Fried, 30, was extradited from the Bahamas on Wednesday to face an eight-count indictment that carries a maximum of 115 years in prison.
He was released on $250 million house arrest at his parents’ $4 million home in Palo Alto, Calif., near Stanford University, where they are both law professors.
Ellison’s plea deal says she faces up to 110 years in prison and that prosecutors “will not recommend any specific sentence” in exchange for her cooperation.
But it also says that if she provides “substantial assistance,” they will file a letter asking for a sentence less severe than required by federal sentencing guidelines.
Former Brooklyn federal prosecutor Moira Penza said it was “too soon” to say how much time Ellison would have to serve in prison, but noted that “cooperating early was the best thing she could have done to reduce the possible the punishment severe”.
“Ms. Ellison was in the door as early as she could, and didn’t even have to be charged. She signals at every opportunity that she takes responsibility and is truly remorseful, Penza said.
Penza also noted that it is “not unheard of for cooperating witnesses—even those facing a sentence as long as Ellison’s—to receive probation in lieu of any prison time.”
Defense attorney Ira Sorkin — whose former client, the late Bernie Madoff, was sentenced to 150 years for his epic Ponzi scheme — declined to guess what would happen to Ellison.
“Predicting what she will get at this stage is impossible,” he said.
