Lawyers representing former Alameda Research CEO Caroline Ellison recommend that she be sentenced to time served after pleading guilty to seven felony counts related to cryptocurrency exchange FTX’s downfall.

In a Sept. 10 filing in the United States District Court for the Southern District of New York, Ellison’s legal team submitted letters from friends, colleagues, and family members recommending she serve a light sentence. The attorneys recommended that the former Alameda CEO, based on the Probation Department’s [PSR] terms, be sentenced to time served with three years’ supervised release at her Sept. 24 hearing.

“The PSR grounds this recommendation in Caroline’s extraordinary cooperation with the government, her otherwise unblemished record, and the numerous testimonials of Caroline’s honesty and ethical behavior both before she started working at Alameda and since she left Alameda,” said the filing. “Caroline 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 Caroline’s early disclosure of the crimes, her unmitigated acceptance of responsibility for them, and—most importantly—her extensive cooperation with the government.” 

Ellison’s lawyers added:

“Without in any way diminishing the very serious crimes here, we respectfully submit that the policy goals and interests of justice [...] do not require sending Caroline to prison, and accordingly request a non-custodial sentence.”

Among the claims in the sentencing memo included former FTX CEO Sam Bankman-Fried recommending that Ellison use the amphetamine Adderall “to stave off fatigue” while working at Alameda. Personal statements from her included in the filing suggested that she was trying to “detox” from the drug.

“Since FTX collapsed in November 2022, Caroline has sought new ways to contribute positively to society […],” said the memo. “[Her] repeated efforts to find a paying job have been unsuccessful because of her notoriety and the uncertainty surrounding her criminal case. Caroline has therefore focused instead on direct service, volunteering more than 700 hours to community organizations.”

Ongoing criminal case

In December 2022, Ellison pleaded guilty to seven counts of wire fraud, commodities fraud, securities fraud and money laundering related to the misuse of user funds between FTX and Alameda. As part of her arrangement with prosecutors, she testified at the criminal trial of Bankman-Fried in October 2023.

In her testimony, Ellison claimed that she had created fraudulent balance sheets “that made Alameda look less risky than it was” after the firm took FTX user funds for other investments. Since her court appearances, she has rarely, if ever, been seen in public, and no mention of her sentencing hearing appeared on the public docket until Sept. 9.

Letter of support for Caroline Ellison from former Alameda employee. Source: Courtlistener

As part of her sentencing recommendation, Ellison’s lawyers included 34 letters of support from friends, family members and colleagues — though personal information from eight of them had been redacted at her request. John Ray, who became CEO of FTX after Bankman-Fried resigned in November 2022, added a statement regarding Ellison’s cooperation. 

FTX and Alameda execs in prison

In March, Judge Lewis Kaplan sentenced Bankman-Fried to 25 years. The same judge sentenced former FTX Digital Markets co-CEO Ryan Salame to 90 months in May. Bankman-Fried’s lawyers have filed a notice to appeal the conviction and sentence, while Salame is scheduled to appear in court on Sept. 12 to address a petition to vacate his guilty plea.

Given her cooperation and testimony, it’s unclear if Judge Kaplan will sentence Ellison to prison time. If given the maximum allowable sentence, she could face up to 110 years in prison, but most legal experts agree this outcome is unlikely.

Former FTX engineering director Nishad Singh and co-founder Gary Wang, who also pleaded guilty to criminal charges and testified at Bankman-Fried’s trial, are scheduled to appear for sentencing hearings on Oct. 30 and Nov. 20, respectively. Their legal teams had not filed sentencing recommendations at the time of publication.

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