Ellison towards freedom: how collaboration in the FTX case has reduced his sentence

Caroline Ellison, former CEO of Alameda Research, has reached a significant milestone in her legal journey. Last October, she was transferred from a low-security federal detention facility to a less restrictive form of confinement within the territory. According to reports from Business Insider, the transfer from Danbury Federal Correctional Institution occurred on October 16, marking an important turning point in the case related to the FTX collapse.

The Path to Release

Ellison’s expected release date is February 20, 2026, a date that comes nearly nine months earlier than the original two-year sentence expiration. This outcome is not accidental: it reflects recognition of her crucial role in the prosecution of Sam Bankman-Fried.

Currently, Ellison is in territorial confinement, a category of federal custody that allows greater freedom than a traditional prison. Authorities have not specified whether she is under house arrest or in a reintegration facility. The Bureau of Prisons confirmed the transfer but kept details confidential, citing privacy and security reasons.

From $11 Billion Fraud to Key Testimony

Ellison’s conviction is linked to one of the biggest scandals in the crypto sector. As the head of Alameda Research, the investment fund associated with FTX, she participated in an $11 billion fraudulent scheme. The scheme involved secretly transferring customer funds from FTX to Alameda, aiming to finance speculative investments and cover accumulated losses.

Ellison pleaded guilty to conspiracy with Bankman-Fried in carrying out this large-scale deception. During the trial, Judge Lewis Kaplan acknowledged that although her cooperation was significant, the severity of the fraud still warranted a custodial sentence. Kaplan rejected the defense’s request to avoid prison, describing the proposal as a “free pass to escape consequences.”

The Key Role in Bankman-Fried’s Conviction

Ellison’s true importance in the judicial system lies in her testimony during the criminal trial against Bankman-Fried in 2023. As a key prosecution witness, she detailed how customer funds were transferred through Alameda Research without any communication to the customers themselves. Her deposition provided concrete evidence that Bankman-Fried had deceived clients, investors, and creditors on a massive scale.

Based on Ellison’s testimony, the jury convicted Bankman-Fried on all seven counts of fraud and conspiracy. Judge Kaplan sentenced him to 25 years in prison, currently serving time in a low-security federal facility in California. Bankman-Fried continues to appeal both the conviction and the sentence, challenging the reliability of Ellison’s testimony and claiming that prosecutors prematurely disclosed her deposition.

The Contrast Between the Two Positions

While Ellison is gradually approaching freedom thanks to her cooperation, Bankman-Fried remains incarcerated with a significantly harsher sentence. In March 2025, Bankman-Fried appeared on Tucker Carlson’s program to discuss life in prison, fueling speculation about possible presidential clemency. Some commentators drew parallels with the case of Ross Ulbricht, founder of Silk Road, who received a presidential pardon.

During the sentencing, Ellison expressed sincere remorse for her actions, telling the court: “At some level, my brain can’t even comprehend all the people I have harmed. But that doesn’t mean I don’t try.” Her transfer to territorial confinement could be interpreted as a recognition of her sincerity and cooperation in pursuing justice.

Implications for Financial Responsibility

The case of Caroline Ellison and her progression toward freedom serve as an important lesson on cooperation in criminal proceedings of historic scale. Her decision to testify against Bankman-Fried had tangible consequences: she directly contributed to his conviction for one of the biggest scandals in the cryptocurrency sector. Ellison remains an example of the delicate balance between personal responsibility and the value of collaboration within the judicial system.