Caroline Ellison Sentenced, CZ to Be Released - Is There Actually Justice in Crypto?

Caroline Ellison, former Alameda Research CEO and ex-girlfriend of FTX founder Sam Bankman-Fried, has finally been sentenced for her role in the collapse of FTX. But is the sentence enough, especially with ex-Binance head Changpeng Zhao finishing his four-month stint behind bars later this week?

Ellison had faced a maximum sentence of 110 years but was only given two years in prison. Judge Lewis Kaplan believed that the 29-year-old was "genuinely remorseful" and that she was exploited by SBF.

“To all the victims and everyone I harmed . . . I am so, so sorry,” she told the court, adding that she was “deeply ashamed” of her actions and that she had the voice of SBF “in [her] head” while committing her crimes.

“I am sorry I wasn’t brave,” she added, describing her romantic relationship with SBF as “on-again, off-again.”

Ellison went on to walk the jury through documents and private chats that showed how SBF directed her other colleagues to steal $10 billion of customer deposits. She recalled how SBF instructed her to create seven different balance sheets for Alameda, with some concealing billions of dollars in kickbacks to FTX execs.

Sympathy for Ellison

Prosecutors wrote to Kaplan ahead of the sentencing hearing highlighting how Ellison “was crucial to the government’s successful prosecution of Samuel Bankman-Fried,” and provided “substantial assistance in the investigation.”

In October 2023, took the stand to testify against SBF, offering juicy details on their relationship and billion-dollar crypto conspiracy. Ellison submitted a guilty plea to seven charges including fraud in December 2022.

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As part of a plea agreement, Ellison confessed to charges of wire fraud and money laundering and provided testimony against SBF. She was also directed to surrender over $11 billion to the court.

Ultimately, SBF was sentenced to 25 years in prison for stealing $8 billion from customers. Recent reports suggest the crypto mogul is being held in an area of the Metropolitan Detention Center in New York alongside recently indicted, Diddy.

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Prosecutors also added how Ellison was humiliated in the press due to her testimony. “The government cannot think of another co-operating witness in recent history who has received a greater level of attention and harassment,” they wrote in the letter to Kaplan.

Kaplan concluded that Ellison was "gravely culpable" but described her cooperation with prosecutors as "remarkable." Nonetheless, he reiterated that her help and remorse should not be regarded as a "get out of jail free card."

“You were vulnerable and you were exploited,” Kaplan said to Ellison in court. “He is really sorry he got caught — your remorse is the real thing.”

"On some level, my brain can't even comprehend the scale of the harm that I caused," Ellison said.

Zhao Outside

Former Binance CEO, Changpeng Zhao (CZ), who pushed the first domino in the FTX scandal by selling all his FTT, will be released from prison on Sunday 29 September.

CZ's arrest came as Binance was hit with a $4 billion fine while CZ himself was ordered to cough up $50 million of his hard-earned cash in November 2023.

Binance and CZ were charged with violating anti-money laundering laws; charges that CZ pleaded guilty to. CZ had allegedly told his staff that it was “better to ask forgiveness than ask permission” when onboarding US customers, despite regulators preventing the firm from operating on American shores.

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In court, CZ was seen as a "philanthropist, a do-gooder, a first-time lawbreaker and family man who turned himself in to accept whatever may come."

US Judge Richard Jones, said to CZ, "to be honest with you, sir, everything I see about your history and characteristics are of a mitigating nature." The judge even said, "You risked your entire net worth to make Binance a success."

CZ's defence lawyer William Burke highlighted how CZ had "no criminal history, no fraud, no other crimes" and pointed towards the support letters and his "extraordinary" cooperation with the government.

Ultimately, CZ was handed a four-month prison sentence, of which he'll complete this weekend.

Justice League

Ellison's sentencing was 55 times less than her maximum sentence, and crypto Twitter isn't impressed.

"Caroline Ellison gets 24 months, Ross Ulbright double life sentence, Make it make sense," CoinDesk author Aubrey Strobel said.

"ryan salame got 4x the sentence of caroline ellison yet she was central to the fraud and owes $11 billion in restitution how is that justice?" Questioned The Block founder, Mike Dudas.

Autism Capital took a swing at the media for her light sentence, stating, "The craziest part of the Caroline Ellison story is how the media tries to paint her as a poor victimized innocent girl exploited by Sam Bankman-Fried and then the Judge asks her to forfeit ELEVEN BILLION DOLLARS."

"Yeah how the media tries to portray her as innocent after reading her Tumblr is insane to us. She is a literal high IQ, meth'd out, polyamorous eugenicist. There's nothing innocent about her. She views stupid people as subhuman and she's playing everyone."

Meanwhile, Binance is celebrating the release of CZ. Current Binance CEO, Richard Teng, spoke to Altcoin Daily, emphasising the importance of learning from mistakes and moving forward.

“We’re very happy that [Zhao’s] getting out,” Teng said. “CZ, Binance – we paid a very big price. I think what’s important is that we learn from that, we get much better.”

“We can do much better, we are invested for the future, and we will continue to pivot on that front. But really, users are at the heart of what we do.”

Teng recalled how CZ, who recently received a lifetime ban from Binance, often told him to treat customers well. “CZ always tell[s] me that: Always treat your users right and they will treat you correctly,” Teng said.

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Unlike Ellison's news, Crypto Twitter has expressed excitement for the return of CZ, although he won't be able to touch Binance:

Of course, CZ's crimes are nowhere near as egregious as Ellison's but the crypto industry has shown itself to be unashamed to support crypto convicts. SBF, who faced 110 years behind bars, landed a 25-year sentence and is in the process of appealing it.

Whether it's CZ's four-month sentence, Ellison's two-year sentence, or SBF's 25-year sentence, it seems the courts are taking a lenient approach to punishing the crypto industry... for better or worse.

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