FTX Scandal: Caroline Ellison Leaves Federal Prison

Caroline Ellison, the former Alameda Research CEO and ex-girlfriend of Sam Bankman-Fried, has been transferred to community confinement after serving part of her sentence for the $11 billion FTX fraud.

Caroline Ellison transferred out of federal prison

Ellison has been moved from federal prison to community confinement after serving around 11 months of her two-year sentence related to the collapse of FTX.

According to Federal Bureau of Prisons records obtained by Business Insider, Ellison was transferred on October 16 from Danbury Federal Correctional Institution in Connecticut. She is now in either home confinement or a halfway house.

Her projected release date is February 20, 2026. This is nearly nine months earlier than the end of her original sentence. Ellison began serving her sentence in early November 2024 after U.S. District Judge Lewis Kaplan sentenced her to two years in prison.

Cooperation played a key role in reduced sentence

In December 2022, Ellison pleaded guilty to multiple conspiracy charges, including wire fraud, money laundering, securities fraud, and commodities fraud. Together, the charges carried a potential maximum sentence of 110 years.

During sentencing, Judge Kaplan emphasized Ellison’s “substantial” cooperation with prosecutors. At the same time, he stressed that the severity of the fraud still justified prison time.

At her September 2024 sentencing hearing, Ellison expressed remorse and acknowledged the harm caused to customers and investors.

Prosecutors described her testimony as essential to the case against Sam Bankman-Fried. Without her cooperation, they said, proving the structure and intent behind the fraud would have been far more difficult.

Ellison testified against Sam Bankman-Fried

Caroline Ellison played a central role as a witness during Sam Bankman-Fried’s criminal trial in October 2023. Over three days, she explained how the former FTX CEO directed executives to misuse customer funds.

According to her testimony, Bankman-Fried instructed Alameda Research to invest billions of dollars taken from FTX customers. Internal systems concealed these transfers from public view.

She also addressed their personal relationship, saying she often felt pressured and deferred to Bankman-Fried because of his influence and authority within the company.

Different outcomes for other FTX executives

Other former FTX executives have faced different legal outcomes. Former CTO Gary Wang and engineering director Nishad Singh both received time-served sentences and supervised release. Both cooperated with prosecutors and testified against Bankman-Fried.

In contrast, former FTX Digital Markets CEO Ryan Salame is serving a seven-year prison sentence in Maryland. He pleaded guilty to campaign finance violations and operating an unlicensed money transmission business. Salame declined to cooperate and has publicly criticized the leniency shown to cooperating witnesses.

Sam Bankman-Fried is currently serving a 25-year prison sentence at a federal facility in California. He was convicted on all seven fraud and conspiracy counts. His legal team continues to pursue an appeal, arguing that he did not receive a fair trial. His family has also called for presidential clemency. Bankman-Fried maintains that FTX was never insolvent and claims customers could have been repaid in full.

FTX bankruptcy distributions continue

FTX creditors continue to receive bankruptcy distributions totaling more than $16 billion in recovered funds. A spokesperson for the Federal Bureau of Prisons declined to comment on the specific conditions of Ellison’s community confinement, citing privacy and security concerns. Ellison’s legal team has not responded to requests for comment.

The update comes as Sam Bankman-Fried has again claimed that FTX was never insolvent, blaming lawyers and bankruptcy administrators for what he says was the destruction of more than $100 billion in value.