Court shows toughness

FTX manager must spend two years behind bars

Caroline Ellison, a former confidante who played a key role in the conviction of former cryptocurrency entrepreneur Sam Bankman-Fried, has been sent to prison for two years. She herself had hoped to avoid a prison sentence.

However, in the view of Judge Lewis Kaplan, a suspended sentence alone would not have been enough of a deterrent for others.

25 years in prison for Bankman-Fried
Bankman-Fried, the founder and head of the collapsed digital currency exchange FTX, was sentenced to 25 years in prison for fraud in the spring. He appealed against this. Ellison was one of Bankman-Fried's closest confidants - and was therefore able to provide the investigators with insider information that incriminated him heavily. Additional tension in the courtroom was caused by the fact that the two had been a couple at times. Ellision showed great remorse during the proceedings and was unable to hold back his tears on several occasions.

FTX, one of the largest trading venues for cryptocurrencies such as Bitcoin, collapsed spectacularly at the end of 2022. Bankman-Fried was arrested in the Bahamas and extradited to the USA.

Bankman-Fried was accused of embezzling client assets. He was also behind a hedge fund called Alameda Research, which made risky transactions and borrowed funds from FTX. Collateral should actually have been deposited. There were also computer systems that were supposed to ensure this. But this software made a secret exception for Alameda. This allowed the hedge fund to go as far into the red as it wanted with FTX. When the Alameda deals went wrong, there was a billion-dollar hole in FTX's coffers.

Ellison was the head of Alameda Research, but emphasized that Bankman-Fried was ultimately in charge. The prosecutors also emphasized their cooperation during the trial.