Instant Reaction: Caroline Ellison Sentenced in FTX Case

Bloomberg Audio Studios, podcasts, radio news. 0:00:07.080 --> 0:00:11.080 Caroline Ellison sentenced to two years in jail in the 0:00:11.240 --> 0:00:15.000 FTX case. She if you remember, pledged guilty to seven 0:00:15.000 --> 0:00:18.520 felony accounts, a fraud and conspiracy in the wake of 0:00:18.600 --> 0:00:23.639 basically the undoing of Samuel bank Binfried and his FTX company, 0:00:23.800 --> 0:00:25.799 which really made everybody in the world, as we know 0:00:25.920 --> 0:00:28.960 we covered it day to day, but just really rethink 0:00:29.040 --> 0:00:30.720 kind of what was going when it comes to digital 0:00:30.720 --> 0:00:32.280 assets in crypto in particular. 0:00:32.440 --> 0:00:34.640 Yeah, indeed, the Tea Life blog running on the terminal 0:00:34.640 --> 0:00:36.320 as well with the details of the sense thing hearing 0:00:36.400 --> 0:00:39.080 Carl Allison addressing the core talking about how sorry she 0:00:39.280 --> 0:00:40.760 was as well that she'd agreed to give up all 0:00:40.760 --> 0:00:43.880 the money that she gained from FTX according to her lawyer, 0:00:43.880 --> 0:00:45.879 and according to her lawyer, she'll never profit in the 0:00:45.880 --> 0:00:49.320 future for her role in this crime. As well. In 0:00:49.360 --> 0:00:53.360 her statement she talked about apologizing to lenders, investors, victims 0:00:53.360 --> 0:00:56.240 who lost money as a result of her actions, and 0:00:56.320 --> 0:00:58.880 everyone in her words that she lied to in the 0:00:58.920 --> 0:01:03.680 process of the FTX issues. One interesting quote, the human 0:01:03.720 --> 0:01:06.080 brains really bought at understanding big numbers, she said, and 0:01:06.200 --> 0:01:07.720 a day goes by, I don't think about all of 0:01:07.720 --> 0:01:10.920 the people that I heard that is Caroline Ellison being 0:01:11.000 --> 0:01:14.880 sentenced in New York described as being a cornerstone in 0:01:14.920 --> 0:01:18.920 the prosecution case against Sam Bankman freed and prosecutors have 0:01:18.959 --> 0:01:22.640 asked the judge to spare carl and Ellison from prison in. 0:01:22.640 --> 0:01:23.199 That as well. 0:01:23.319 --> 0:01:26.000 Yeah, she'll also have to forfeit about eleven billion dollars 0:01:26.640 --> 0:01:29.400 as a result of this, So we're getting more details. 0:01:29.440 --> 0:01:32.040 She is sentenced to as we said the twenty four 0:01:32.080 --> 0:01:36.679 months and talking about her cooperation specifically, the judge did 0:01:36.720 --> 0:01:39.360 say that she was by no means free of culpability, 0:01:39.959 --> 0:01:42.800 So again something we covered from day to day for 0:01:42.800 --> 0:01:45.319 a long time, but just seeing certainly as a result 0:01:45.600 --> 0:01:46.919 some of the sentences. 0:01:46.480 --> 0:01:48.640 And look, they'll also be looking more closely now the 0:01:48.640 --> 0:01:50.840 sensing of other cooperators in this case as well, Gary 0:01:50.880 --> 0:01:54.000 Wang and Nishad Singing as well. Perhaps this may indicate 0:01:54.040 --> 0:01:56.080 that they may also get jail time. We know if 0:01:56.120 --> 0:01:58.880 the prosecutes have asked her to spare from a prison sentence, 0:01:58.920 --> 0:02:00.720 but she is now being sentenced to two years at 0:02:00.720 --> 0:02:04.400 a minimum security facility as well, and the judge did 0:02:04.480 --> 0:02:08.359 praise Allison profusely said that in this case, this series, 0:02:08.400 --> 0:02:11.600 there cannot be a get out of jail free card. 0:02:11.919 --> 0:02:14.639 So we are talking about Carl and Alison being sentenced 0:02:14.639 --> 0:02:18.200 over the collapse of FTX, and that hearing happening right now. 0:02:18.200 --> 0:02:21.000 We're just showing you some pictures of her leaving course 0:02:21.560 --> 0:02:24.200 of course during the trial, as we have been covering 0:02:24.280 --> 0:02:28.160 in detail of the collapse of that company and the 0:02:28.240 --> 0:02:31.239 consequences that have been for sam Banguin Freed and for others. 0:02:31.320 --> 0:02:33.440 Well, we should remind everybody right she was the former 0:02:33.480 --> 0:02:36.360 CEO of Alimeter Research and that was the trading from 0:02:36.400 --> 0:02:40.600 that was affiliated with FTX, specifically the cryptocurrency exchange, which 0:02:40.680 --> 0:02:44.359 was founded by Samuel Makmin Freed, and then of course 0:02:44.520 --> 0:02:47.280 we know came to its undoing in twenty twenty two, 0:02:47.320 --> 0:02:49.400 so we're also talking about two years ago, or roughly 0:02:49.400 --> 0:02:52.160 two years ago, she pled guilty to fraud, money laundering, 0:02:52.280 --> 0:02:57.360 conspiracy charges related to her role specifically at Alameda Research. 0:02:57.520 --> 0:03:00.200 So again we know FTX Alamedia they off out for 0:03:00.280 --> 0:03:03.359 bankruptcy and it was really that case that undoing. Here 0:03:03.400 --> 0:03:06.760 was an individual who was seen as the JP Morgan, 0:03:06.840 --> 0:03:09.720 if you will, of the crypto world, and so many 0:03:09.760 --> 0:03:12.920 people followed him, respected him. He was the go to 0:03:13.000 --> 0:03:15.639 when it comes or when it came to cryptocurrencies, and 0:03:15.680 --> 0:03:18.520 of course the undoing made everybody look very differently at 0:03:18.520 --> 0:03:20.359 the crypto world, and we think about what kind of 0:03:20.400 --> 0:03:22.320 oversight was necessary. 0:03:22.000 --> 0:03:24.560 Indeed, and look, I mean, this issue for getting jail 0:03:24.600 --> 0:03:27.040 time is something that keep coming back to as well, 0:03:27.040 --> 0:03:30.160 because the expectation had been that she wouldn't receive jail time, 0:03:30.360 --> 0:03:32.400 and our colleagues pointing to the fact that the judge 0:03:32.520 --> 0:03:35.520 made a comment that he couldn't remember when Caroline Nelson 0:03:35.680 --> 0:03:40.160 had been even slightly inconsistent in her testimony during this trial, 0:03:40.320 --> 0:03:42.360 think about how that contrast was sort of commentary that 0:03:42.360 --> 0:03:46.400 we heard around testimony from SBF as well from San 0:03:46.440 --> 0:03:48.400 Bankment Freed as well during his trial as well, which 0:03:48.400 --> 0:03:52.840 there had been frequent criticism from the judge obviously inconsistencies 0:03:53.200 --> 0:03:56.000 in his testimony and at one point that that was 0:03:56.000 --> 0:03:58.480 something where they had to be extensive hearings without the 0:03:58.480 --> 0:04:00.800 presence of the jury because of the issues with the 0:04:00.840 --> 0:04:03.040 testimony from sein Brand bin Fried and the fact that 0:04:03.080 --> 0:04:04.880 there was such a big contrast and how the judge 0:04:04.880 --> 0:04:08.600 of described carlais and makes the sentencing here very noteworthy. 0:04:08.720 --> 0:04:11.040 All Right, just to rehash, Caroline Ellison sentenced to twenty 0:04:11.040 --> 0:04:13.800 four months prison ordered to forfeit eleven billion dollars by 0:04:13.800 --> 0:04:17.160 a federal judge for her role in the FTX collapse. 0:04:17.600 --> 0:04:20.440 And this was despite helping prosecutors in the conviction of 0:04:20.480 --> 0:04:22.840 Sam Bankman Freed, which of course was her former boss 0:04:22.839 --> 0:04:26.520 but also her former boyfriend. So let's get to Bloomberg News. 0:04:27.720 --> 0:04:31.480 Bloomberg News. Excuse me, Legal Alliston, host of Bloomberg Law 0:04:31.560 --> 0:04:34.520 on Bloomberg Radio. Jim Rosso is with us back at 0:04:34.560 --> 0:04:39.320 New York headquarters for Bloomberg. So June two years. First 0:04:39.360 --> 0:04:41.960 of all, fair sentence. Where was this in terms of 0:04:41.960 --> 0:04:43.120 what she was facing. 0:04:43.640 --> 0:04:46.799 Well, it's very low compared to what she was facing. 0:04:46.960 --> 0:04:50.320 And you know, the judge kept comparing her cooperation to 0:04:50.839 --> 0:04:53.440 what happened with Sam Bankman Freed. He said he's never 0:04:53.480 --> 0:04:57.360 seen a cooperating witness like this. There wasn't any inconsistencies 0:04:57.400 --> 0:05:00.640 in her testimony, but that still she commit a crime 0:05:00.680 --> 0:05:02.680 here and that you know, there has to be some 0:05:02.800 --> 0:05:06.160 kind of punishment. You know. What's unusual is the Probation 0:05:06.360 --> 0:05:09.320 Department did not ask for any time, and the prosecutors 0:05:09.360 --> 0:05:11.719 didn't ask for any time, So the judge has to 0:05:11.800 --> 0:05:15.080 balance that and the fact that you want to encourage 0:05:15.200 --> 0:05:19.040 people to come forward even if they're guilty, to later testify, 0:05:19.480 --> 0:05:21.919 and that she exposed this whole thing, so he brought 0:05:21.920 --> 0:05:24.479 that out a lot, but he still wanted to send 0:05:24.480 --> 0:05:26.760 a message that you know, you can't get away with this, 0:05:27.400 --> 0:05:30.080 so he balanced that out. Now, Sam Beckman free got 0:05:30.080 --> 0:05:33.000 twenty five years, so compared to that, she only got 0:05:33.040 --> 0:05:36.239 two years. It seems I would consider it pretty lenient, 0:05:36.640 --> 0:05:40.200 although there was a possibility that she would get no time. 0:05:41.839 --> 0:05:43.720 What should we be thinking about them when think about 0:05:43.720 --> 0:05:47.320 the other sentencing that we're still waiting for over the 0:05:47.360 --> 0:05:52.320 collapse of FTX. What could that mean then for their prospects? 0:05:52.480 --> 0:05:54.200 Well, I think it probably means that they're going to 0:05:54.200 --> 0:05:56.599 get some kind of a minimal sentence. She was the 0:05:56.880 --> 0:05:59.720 star witness and she was the one who came forward 0:05:59.760 --> 0:06:04.600 for and, you know, help the prosecutors to unveil the conspiracy, 0:06:04.760 --> 0:06:08.479 and the judge even took out some spreadsheets that had 0:06:08.520 --> 0:06:12.640 helped the prosecutors in the case. So they will probably 0:06:12.680 --> 0:06:15.200 get I probably a light sentence, but I don't know 0:06:15.240 --> 0:06:17.760 if it'll be as light as two years. So we'll 0:06:17.760 --> 0:06:21.400 have to see that. There are two more cooperators, but 0:06:21.560 --> 0:06:24.159 none of them she was the star witness. It was 0:06:24.200 --> 0:06:27.200 obvious that she was the star witness. So I don't 0:06:27.200 --> 0:06:29.880 know if they're going to get as you know, as 0:06:29.920 --> 0:06:31.880 low a sentence as she did. And I say as 0:06:31.960 --> 0:06:35.919 low a sentence because you know, she really was facing 0:06:36.160 --> 0:06:39.720 you know, ten twenty years if you'd gone by the guidelines. 0:06:39.800 --> 0:06:43.279 So as Sam bankmin Freed was sentenced to twenty five years, 0:06:43.720 --> 0:06:46.840 and you know, the judge took account of her cooperation, 0:06:47.120 --> 0:06:50.839 and the prosecutors also mentioned. It seemed like everybody was 0:06:50.880 --> 0:06:53.640 talking about the same thing, how she helped the prosecution 0:06:53.800 --> 0:06:56.720 so much by cooperating, but so that it was a 0:06:56.760 --> 0:06:58.920 little bit of a surprise because the judge was talking 0:06:59.000 --> 0:07:02.160 about her cooper then all of a sudden bam. But 0:07:02.440 --> 0:07:05.520 you know, he said you did commit a crime, and 0:07:05.560 --> 0:07:08.400 then he said that you have to serve time for that. 0:07:08.520 --> 0:07:10.520 I had thought it maybe he might even let her 0:07:10.560 --> 0:07:12.920 off without any sentence from the way he was going, 0:07:13.360 --> 0:07:15.480 but he was just laying a foundation, I think, so 0:07:15.520 --> 0:07:16.800 he could explain himself. 0:07:17.360 --> 0:07:20.600 Hey, jan one last question that eleven billion dollars that 0:07:20.640 --> 0:07:22.920 she has to forfeit. How do we explain that or 0:07:22.960 --> 0:07:24.960 what specifically does that denote. 0:07:25.200 --> 0:07:27.840 It seems awfully high to me, and that's something that 0:07:28.080 --> 0:07:29.400 I was just talking to someone about. I have to 0:07:29.440 --> 0:07:31.680 go and look into it because it seems an awfully 0:07:31.760 --> 0:07:34.800 high number. I didn't think that she had gotten eleven 0:07:34.840 --> 0:07:37.280 billion dollars from this, because I know some of the 0:07:37.280 --> 0:07:41.760 other cooperators who had you know, had homes and things. 0:07:41.800 --> 0:07:44.280 It was in the millions, not the billions. So that 0:07:44.480 --> 0:07:47.320 seems high. I really have to look into it. I 0:07:47.360 --> 0:07:51.080 think it's it's rather high. She has to of course, 0:07:51.080 --> 0:07:53.760 she has to disgorge it. It's you know, you would 0:07:53.800 --> 0:07:55.920 expect that the judge ruled it, but you would expect 0:07:55.920 --> 0:07:58.480 that if she didn't, the prosecution would come after her. 0:07:58.680 --> 0:08:01.920 That should go back to the victim. So that's not surprising. 0:08:01.960 --> 0:08:04.000 But the number is surprising to me, and I have 0:08:04.080 --> 0:08:05.880 to really look into where it came from. 0:08:06.360 --> 0:08:08.080 Yeah, that number kind of struck me as well. And 0:08:08.120 --> 0:08:10.360 I know it was a red headline certainly on the Bloomberg. 0:08:10.360 --> 0:08:11.960 All right, we're going to leave it on that note. Hey, June, 0:08:12.000 --> 0:08:15.840 thank you so much. Of course, our legal analyst here 0:08:15.840 --> 0:08:18.960 at Bloomberg News and a host of Bloomberg Law on Bloomberg Radius, 0:08:19.000 --> 0:08:20.520 so should be sure to catch her a little bit 0:08:20.560 --> 0:08:23.880 later on today on the latest really of the FTX saga. 0:08:24.040 --> 0:08:27.080 Yeah, fascinating that headline. Carlon Alison Salad sentenced for two 0:08:27.160 --> 0:08:29.440 years in her role of the collapse of FTX.