Caroline Ellison’s Legal Team Seeks No Jail Time for Role in FTX Collapse

Author

Ruholamin Haqshanas

Author

Ruholamin Haqshanas

About Author

Ruholamin Haqshanas is a contributing crypto writer for CryptoNews. He is a crypto and finance journalist with over four years of experience. Ruholamin has been featured in several high-profile crypto...

Author Profile

Share

Copied

Last updated: 

September 11, 2024

Why Trust Cryptonews

Cryptonews has covered the cryptocurrency industry topics since 2017, aiming to provide informative insights to our readers. Our journalists and analysts have extensive experience in market analysis and blockchain technologies. We strive to maintain high editorial standards, focusing on factual accuracy and balanced reporting across all areas - from cryptocurrencies and blockchain projects to industry events, products, and technological developments. Our ongoing presence in the industry reflects our commitment to delivering relevant information in the evolving world of digital assets. Read more about Cryptonews

Caroline Ellison, former CEO of Alameda Research, is seeking leniency in her sentencing for her involvement in the collapse of FTX.

Her legal team has urged the court to forego prison time, advocating for a sentence of time served combined with supervised release.

In a sentencing memorandum submitted on Tuesday, Ellison’s lawyers said that the U.S. Probation Department has recommended time served with three years of supervised release due to her cooperation with authorities.

Ellison’s Testimony Played Key Role in Bankman-Fried’s Trial

Ellison has been a key figure in the ongoing investigation into the downfall of FTX and its former CEO, Sam Bankman-Fried.

Her testimony played a pivotal role in his trial, which culminated in his conviction on seven counts of fraud and conspiracy.

Bankman-Fried was sentenced to 25 years in prison in March 2024.

Alameda Research, the trading firm Ellison led, was tightly intertwined with FTX, raising concerns about potential misuse of customer funds and conflicts of interest due to FTX’s loans to Alameda.

In their filing, Ellison’s legal team stressed her cooperation with both the government and the FTX bankruptcy estate, underscoring that her assistance had facilitated the recovery of hundreds of millions of dollars in assets for creditors.

They argued that Ellison’s actions demonstrated accountability and that she posed no risk of future offenses.

The team maintained that leniency would promote respect for the law and acknowledge her cooperation.

Ellison’s sentencing is scheduled for September 24 in New York. She faces multiple charges, including wire fraud and conspiracy to commit money laundering.

Support for leniency has also come from John J. Ray III, CEO of the FTX bankruptcy estate, and Robert J. Cleary, the bankruptcy examiner, both of whom praised her contributions to the investigation and recovery efforts.

FTX Settles $600M Robinhood Shares Dispute

Just recently, FTX reached a settlement with Emergent Technologies, a company co-founded by Bankman-Fried, over a dispute involving more than $600 million worth of Robinhood shares.

Per the settelement, FTX will pay Emergent $14 million to cover administrative expenses related to the withdrawal of its petition for 55 million Robinhood shares and cash.

Ownership of the Robinhood shares has been contested by multiple parties, including FTX, BlockFi, Bankman-Fried, and Emergent.

The shares were seized by the U.S. Department of Justice in January 2023, following the collapse of FTX in November 2022, and were later repurchased by Robinhood for about $606 million on September 1, 2023.

Meanwhile, the SEC warned last week that it may challenge the repayment plan of FTX if the plan involves returning funds to creditors using stablecoins.

SEC attorneys indicated that while repaying creditors with stablecoins might not be outright illegal, the agency reserves the right to contest such repayments if they involve US-dollar pegged crypto assets.

FTX has considered several strategies to make creditors whole, including a shelved plan to revive the exchange.

The latest proposal from FTX involves liquidating assets and settling claims based on the U.S. dollar value of those assets at the time of the exchange’s bankruptcy.