- Caroline Ellison, the ex-CEO of Alameda, has $250,000 bond after pleading guilty in the FTX case.
- She and FTX co-founder Gary Wang are working with the feds to probe Sam Bankman-Fried’s crypto empire.
- Cooperators can give up a high level of autonomy in the hope of a lighter sentence, legal experts have said.
Caroline Ellison’s world is about to get much smaller since the heady days of work and live with a group of colleagues — including her ex-boyfriend, former FTX CEO Sam Bankman-Fried — in the Bahamas.
Plea deals that Ellison, who was the CEO of Bankman-Fried’s trading company Alameda Research, and FTX co-founder Gary Wang reached with federal prosecutors in New York, releasing them each on bail bonds. $250,000.
Their deals don’t involve the same rigid oversight imposed on Bankman-Fried, who left a federal court in New York on Thursday the $250 million bail and wearing an ankle monitor. But cooperators like Ellison may still be quite attached to prosecutors and estranged from old circles while the government builds its case against Bankman-Fried.
For example, Ellison’s agreement virtually bars him from speaking about events surrounding FTX and Alameda without prosecutors’ permission, and limits his travel within the continental United States.
Lawyers for Ellison and others on the web at FTX and Alameda have most likely also advised their clients against communicating with each other during the ongoing U.S. government criminal investigation, white-collar experts tell Insider. .
“Her day-to-day must have changed drastically because of these charges and her status as a co-op,” said Nancy DePodesta, co-chair of the white-collar defense practice at Saul Ewing LLP and formerly a federal prosecutor in Chicago.
“Yeah, she’s still free to go about her life, so to speak, with some restrictions, of course,” DePodesta added. But her former colleagues will turn away from her because she cooperates.
An attorney for Ellison did not respond to requests for comment Thursday.
Ellison pleaded guilty to seven counts against her in a charging document called a tip prosecutors released this week. The government portrayed Ellison and Wang as active henchmen in Bankman-Fried’s alleged scheme to use FTX client funds to funnel money into its separate company Alameda, according to a civil complaint filed Wednesday by the U.S. Securities and Exchange Commission.
The charges against Ellison, including wire fraud and conspiracy, mirror those against Bankman-Fried. But unlike his charges, his were not the product of a grand jury indictment, as his cooperation and plea relieved prosecutors to take that step.
The counts against Ellison carry a maximum sentence of 110 years, if the sentences for each were to be stacked. But his cooperation could get him a much lighter sentence, maybe even no jail time at all, depending on how useful prosecutors find his help and what the judge decides.
“It wouldn’t be anything close to what they would be exposed to if they were to stand trial,” said Andrey Spektor, white-collar partner at Bryan Cave Leighton Paisner LLP and a former Brooklyn federal prosecutor. Spector was referring to the kinds of punishments cooperators can expect.
But there is a long way to go. Bankman-Fried’s own litigation in the United States is just beginning, and he is expected to enter his plea on January 1. 3.
Cooperators like Ellison and Wang usually stay behind the scenes. They won’t be convicted until prosecutors release much more of their investigation and Bankman-Fried’s fate becomes clearer.
In the meantime, Ellison and Wang are expected to continue working with investigators.
“While we may not see her in court anytime soon, prosecutors will likely work with her to the extent that they believe she has more information that would help them,” said Carl Tobias, a law professor at the University of Richmond.
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