Carolyn Allison (center), former CEO of Alameda Research LLC, arrives in a U.S. courtroom in New York, Tuesday, October 10, 2023.
Yuki Iwamura | Bloomberg | Getty Images
carolyn allison is the star witness in the criminal case against disgraced FTX founder Sam Bankman-Fried. She faces her own sentencing on Tuesday.
Ellison's role in the collapse of the cryptocurrency empire run by her former boss and ex-boyfriend Sam Bankman-Freed Her goal was to lie to investors, help steal billions of dollars from FTX clients, and then redirect those funds into bets and debt at the digital asset hedge fund Alameda Research, where she was CEO.
In the eyes of the American justice system, both Bankman-Fried and Ellison were guilty of the same crime.
two counts of wire fraud, two counts of conspiracy to commit wire fraud, one count of conspiracy to commit securities fraud, one count of conspiracy to commit commodities fraud and one count of conspiracy to commit money laundering. The statutory maximum sentences for these charges are approximately 110 years, but there is a sliding scale given the scope of the offense and the defendant's criminal history.
CNBC spoke with former federal prosecutors, trial lawyers and legal experts to get their thoughts on what Ellison might face during Tuesday's hearing. They agreed that Allison would likely walk away without any jail time.
In November, a 12-person jury unanimously found Bankman-Fried guilty of all seven criminal charges against him, and he was subsequently sentenced to 25 years in prison for cryptocurrency fraud in March and ordered to pay $11 billion in forfeitures.
Unlike Bankman-Fried, Allison Agree to plea deal in December 2022. she plead guilty She faced all the charges against her and spent two years working with governments, regulators and the FTX bankruptcy estate.
Meanwhile, Bankman-Fried continues to deny nearly all criminal wrongdoing and seeks to have his case reopened.
Attorneys for Ellison and Bankman-Fried did not immediately respond to requests for comment.
The government presents its case against former FTX CEO Sam Bankman-Fried.
Source: SDNY
no time for jail
Cooperate with prosecutors in white-collar crimes, even in so-called "white-collar crimes" “One of the largest financial fraud cases in U.S. history” is far-reaching.
Kevin J. O'Brien, a former assistant U.S. attorney who specializes in white-collar criminal defense in New York, said Allison was the most important of several insiders who testified for the government.
“Because of her close relationship with Sam, she was able to provide a personal portrait of Bankman-Fried, a truly elusive character that may be unique among government cases,” O'Brien said.
The federal Probation Department recommended “a sentence of three years of supervised release” in recognition of Ellison's “excellent cooperation with the government” and “her otherwise unblemished record.”
While District Judge Lewis Kaplan was under no obligation to accept the probation department's recommendation, O'Brien said that coupled with some kind of fine, it would be a “fair sentence” because it reflected the “enormous value” of Ellison's cooperation.
Braden Perry, a former senior trial attorney at the U.S. Commodity Futures Trading Commission, said the U.S. legal system tends to reduce sentences for those who help lower higher targets.
Perry estimated that Ellison, the third Bankman-Fried executive to be sentenced, faces up to 18 months in prison and three years of supervised release.
Perry said that although Allison was deeply involved in the fraud, “she did not have the same control or leadership as the SBF, which may have affected the judge's decision to impose a lenient sentence.”
Encourage cooperation
Yesha Yadav, Allison's law professor and associate dean, said Allison's conviction will likely require several years of supervised release and community service, as well as a series of additional restrictions on activities, such as not being able to operate in cryptocurrency and non-cryptocurrency markets. trading or traveling abroad.
Unlike Bankman-Fried, who faced public warnings and was described by the government as a repeat offender, Ellison was repeatedly praised by prosecutors as well as by new FTX CEO and bankruptcy administrator John Ray III.
“On the witness stand, she gave the impression of guilt and pain over what she had done,” Yadav said.
SBF Defense Team Requests Not more than 6.5 years prison time, but Kaplan said Allison's testimony ultimately proved crucial in his decision to sentence Bankman-Fried to nearly four times the sentence.
Kaplan also sided with federal prosecutors, who revoked Bankman-Fried's bail and charged him with witness tampering after Bankman-Fried leaked a private diary written by Ellison. Sent back to prison. Kaplan described the Bankman-Fried leak as one intended to “hurt” and “discredit” Ellison.
Yadav said Allison “suffered very public humiliation over the past two years, often with sexist undertones.”
Former federal prosecutor Paul Tuchmann said most judges don't like sending people to prison who don't pose a future threat to others.
“The likelihood that Ellison will harm anyone again through criminal conduct in the future is extremely low,” Tuchman said.
If Kaplan ultimately avoids jail time at Ellison's sentencing, it'll be a big win for former FTX engineering chief Nishad Singh and FTX co-founder and CTO Gary Wang Might be a good sign. Singh and Wang will be sentenced on October 30 and November 20 respectively.
“I do think Judge Kaplan could 'afford' to keep all these people out of jail if he wanted to,” Tuchman said. “Most judges would want to encourage such people to cooperate and sentence them to Serving a sentence of probation is the best way to do this.
watch: Sam Bankman-Fried's family negotiates sentence: We are heartbroken and will continue to fight for our son
