Caroline Ellison released from prison, faces 10-year ban from holding executive positions

The former CEO of Alameda Research, Caroline Ellison, was released from federal prison on Wednesday after completing her federal supervision. Court documents revealed that she has been moved from federal prison to the post-release supervision phase. 

Ellison had settled an agreement with regulators the previous year after being transferred from a Connecticut prison to home confinement in October. She is also required to comply with multiple post-sentence regulatory restrictions after completing her sentence. 

SEC bars Ellison from holding any executive positions for 10 years

The U.S. Securities and Exchange Commission issued a 10-year prohibition against Ellison serving in any executive positions at any digital asset exchange or any publicly traded firm. The prohibition follows her involvement in legal proceedings related to her previous roles at the defunct FTX crypto company. 

Other executives, including Zixiao Wang, former CTO of FTX Trading, and Nishad Singh, former Co-Head of engineering at FTX, both agreed on a settlement with the SEC. They have also been prohibited from being officers or directors of any public company for several years.

An SEC document filed in December in the U.S. District Court for the Southern District of New York revealed that Ellison agreed to a 10-year officer-and-director bar. Wang and Singh both agreed to an eight-year bar. The filing also indicated that Ellison, Wang, and Singh agreed to the Commission’s antifraud allegations and to a 5-year conduct-based injunction.

Ellison’s release comes 10 months earlier than her full sentence of two years, which began in November 2024. She pleaded guilty in December 2022 to fraud and conspiracy charges linked to FTX. The former executive was sentenced in September 2024, and U.S. District Judge Lewis Kaplan ordered her to forfeit $11 billion. 

Ellison’s early release follows her good conduct in prison, where she is said to have cooperated with authorities investigating FTX. She had previously testified against FTX founder Sam Bankman-Fried, which led to a 25-year conviction in federal prison. 

CEO of the FTX bankruptcy estate, John J-Ray III, acknowledged that Ellison has provided the debtors with valuable assistance and cooperation. He also revealed that her cooperation led to the recovery of hundreds of millions of dollars for the Debtor, benefiting creditors.

SEC orders Sam Bankman-Fried to remain in federal prison

Ellison’s release marks the final stage in the legal process involving the FTX and Alameda Research executives involved in the 2022 collapse of the digital asset exchange.  Bankman-Fried had appealed in November that his fraud conviction and 25-year prison sentence should be scrapped due to an unfair trial.

A three-judge panel of the 2nd U.S. Circuit Court of Appeals in Manhattan found Bankman-Fried guilty of seven charges in the 2023 FTX case. The court issued a notice for the former FTX CEO to remain in federal prison on fraud charges.

The judges agreed that the evidence presented at trial, including witness testimony and troves of FTX documents, proved the former executive’s guilt. Cryptopolitan also previously reported that U.S. President Donald Trump revealed earlier this year that he has no intentions of pardoning Bankman-Fried.

Investigations revealed that FTX Co-Founder Sam Bankman-Fried operated a scheme that manipulated the price of the firm’s security token, FTT, by purchasing large quantities on the open market to prop up its price. The SEC also revealed that the crypto hedge fund owned by Wang and Bankman-Fried and run by Ellison used FTT as collateral for undisclosed loans.

The initiative allegedly caused Alameda’s balance sheet to be overstated, misleading investors about the company’s risk exposure. Ellison and Wang were tied to the scheme as active participants trying to deceive FTX’s investors. Wang was accused of developing the FTX software code that allowed Alameda to divert customer funds. Ellison was accused of misappropriating FTX funds for Alameda’s trading activities.

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Source: https://www.cryptopolitan.com/caroline-ellison-released-from-prison/