Caroline Ellison, the former CEO of Alameda Research, is requesting leniency in her sentences for her role in the collapse of FTX.
Her legal team has implored the court to forgo prison time, advocating for a sentence of time served in conjunction with supervised release.
Ellison’s attorneys stated in a sentencing memorandum submitted on Tuesday that the U.S. Probation Department has recommended three years of supervised release in addition to time served due to her cooperation with authorities.
Ellison’s Testimony Played a Key Role in Bankman-Fried’s Trial
Ellison has been a critical figure in the ongoing inquiry into the demise of FTX and its former CEO, Sam Bankman-Fried.
Her testimony was instrumental in his trial, which resulted in his conviction on seven counts of conspiracy and fraud.
In March 2024, Bankman-Fried was sentenced to 25 years in prison.
Ellison’s trading firm, Alameda Research, was closely associated with FTX, which raised concerns about the potential misappropriation of customer funds and conflicts of interest due to FTX’s loans to Alameda.
Ellison’s legal team emphasized in their filing that her cooperation with the government and the FTX bankruptcy estate had facilitated the recovery of hundreds of millions of dollars in assets for creditors.
However, they contended that Ellison’s actions were indicative of accountability and that she did not pose a threat to future offenses.
The team thought leniency would foster reverence for the law and recognize her cooperation.
Ellison’s sentencing is scheduled for September 24 in New York. She is currently facing numerous allegations, including conspiracy to commit money laundering and wire fraud.
John J. Ray III, CEO of the FTX bankruptcy estate, and Robert J. Cleary, the bankruptcy examiner, have also expressed their support for leniency. They have both commended her contributions to the investigation and recovery efforts.
FTX Resolves a $600M Robinhood Shares Dispute
Emergent Technologies, a company co-founded by Bankman-Fried and FTX, has recently settled a dispute involving over $600 million in Robinhood shares.
Emergent will receive $14 million from FTX to fund administrative expenses associated with withdrawing its petition for 55 million Robinhood shares and cash, as stipulated in the settlement.
FTX, BlockFi, Bankman-Fried, and Emergent have all contested the ownership of Robinhood shares.
The U.S. Department of Justice seized the shares in January 2023 following the bankruptcy of FTX in November 2022. Robinhood repurchased them for approximately $606 million on September 1, 2023.
In the interim, the SEC issued a warning last week that it may challenge the repayment plan of FTX if it entails the return of funds to creditors using stablecoins.
The SEC counsel stated that, although repaying creditors with stablecoins may not be explicitly illegal, the agency retains the right to contest such repayments if they involve crypto assets pegged to the U.S. dollar.
FTX has considered several strategies to satisfy creditors, including a shelved proposal to revive the exchange.
The most recent proposal from FTX entails the liquidation of assets and the resolution of claims by the U.S. dollar value of those assets at the time of the exchange’s bankruptcy.