Who Is Caroline Ellison? The FTX Fraudster Who Helped Take Down Crypto's Biggest Scam — Now Out of Prison

Caroline Ellison, the mathematician who ran Sam Bankman-Fried's crypto trading empire before becoming the government's star witness against him, was released from federal custody on 21 January — roughly 10 months earlier than her full sentence would have required.

The 31-year-old former Alameda Research chief executive left a residential re-entry programme in New York, according to Federal Bureau of Prisons records, marking the end of her custodial period for helping orchestrate what prosecutors described as 'one of the biggest financial frauds in American history.'

Her release comes just two weeks after President Donald Trump confirmed he would not pardon Bankman-Fried, leaving her former boss and ex-boyfriend to serve out a 25-year sentence with a scheduled release date of September 2044.

The Making of a Crypto Fraudster

Ellison's journey to federal prison began in the academic corridors of suburban Boston. The eldest of three daughters born to Glenn and Sara Fisher Ellison, both economics professors at the Massachusetts Institute of Technology, she reportedly learned Bayesian statistics in primary school. At age eight, she presented her father with an economic study on stuffed animal prices for his birthday.

She captained her high school maths team, represented the US at the 2011 International Linguistics Olympiad, and by 2016, was awarded a degree in mathematics from Stanford. Her talent was evident early on, as she ranked among the country's top 500 in the demanding Putnam exam for three consecutive years.

After working as a quantitative trader at Jane Street Capital, where she first met Bankman-Fried, Ellison joined his cryptocurrency hedge fund Alameda Research in March 2018. She became co-chief executive in October 2021 and took sole leadership in August 2022 — just three months before the firm collapsed in November.

Despite running a firm later revealed to have access to billions in misappropriated customer funds, Ellison held no equity in Alameda and only a 0.5% stake in FTX.

Three Days That Changed Everything

When FTX imploded in November 2022 amidst a liquidity crisis and allegations that approximately $8 billion (£5.95 billion) in customer deposits had been funnelled to Alameda via a secret line of credit, Ellison faced a decisive choice.

A month later, she pleaded guilty to seven serious charges, including wire fraud, securities deception, commodity scams, and a conspiracy to launder money. Following her confession, she cooperated extensively, attending around 20 meetings with investigators, helping unravel how the scheme operated from within.

Prosecutors described Ellison as a 'remarkable' and 'exemplary' witness. During Bankman-Fried's October 2023 trial, she spent three days on the stand explaining how customer funds were used to cover Alameda's trading losses, finance high-risk investments, and fund political donations — all while depositors believed their money was securely held by the exchange.

Judge Lewis Kaplan, who presided over both cases, noted he had 'never seen' a cooperator quite like Ellison. 'I've failed to find the slightest error of fact, the slightest inconsistency,' he said at her sentencing.

Her testimony proved decisive. Bankman-Fried was convicted on all seven counts and sentenced in March 2024 to nearly 25 years in prison, with orders to forfeit $11 billion (£8.19 billion).

The Price of Cooperation

For her 'very substantial cooperation', as Judge Kaplan described it, Ellison received a two-year prison sentence in September 2024.

'Cooperation should not be a get-out-of-jail-free card,' the judge remarked while imposing the sentence.

Ellison began serving her sentence at a low-security facility in Danbury, Connecticut, in November 2024. By October 2025, she had moved into a community setting. Now out nearly 10 months early, her release was attributed to good behaviour and her assistance during legal proceedings.

What stands out most is how different her outcome feels. Gary Wang, once the tech lead at FTX, and Nishad Singh, a senior engineer, both provided detailed cooperation but avoided jail. Conversely, Ryan Salame, another former executive, chose not to assist investigators and was sentenced to seven years behind bars.

What Comes Next

Though Ellison has left federal custody, her legal issues are not entirely over. She remains subject to supervised release and must forfeit $11 billion (£8.19 billion). On 19 December 2025, she agreed to a 10-year ban on serving as an officer or director of public companies or cryptocurrency exchanges, effectively ending any prospect of returning to senior finance roles until 2035.

Meanwhile, Bankman-Fried's hopes of an early release now appear unlikely. Trump has granted clemency to individuals tied to cryptocurrency, such as the founder of Binance and the operator of Silk Road. However, he made it clear to The New York Times this month that Bankman-Fried will not be among those considered for clemency.

For the millions of FTX customers who lost access to their funds in November 2022, the outcome offers a complex form of closure. The bankruptcy estate has recovered enough assets to repay approximately 98% of creditors — around 119% of their claims from November 2022.

Ellison's release marks the end of custody for all cooperating witnesses in the FTX case, leaving only Bankman-Fried and Salame behind bars for the fraud prosecutors said stole billions from thousands of people.