Caroline Ellison is facing 110 years in prison due to collapse of FTX
Topics: Cryptocurrency, Money, News, US News
Joe Harker
Featured Image Credit: LinkedIn/Sipa US/Alamy Stock Photo
Topics: Cryptocurrency, Money, News, US News
A woman could spend the next 110 years in prison for her part in the collapse of a cryptocurrency trading empire.
Until recently, FTX had been the second largest crypto exchange in the world - but the company collapsed when it declared bankruptcy on 11 November.
Rumours that FTX and other companies owned by company CEO Sam Bankman-Fried were in financial trouble led to many cryptocurrency investors deciding to withdraw their money, the crypto equivalent of a run on the banks.
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However, many customers were unable to access their funds and attempts to organise a bailout failed, leaving FTX and associated companies FTX US and Alameda Research filing for Chapter 11 bankruptcy in the US.
Filing Chapter 11 means a company can continue operating while going through bankruptcy.
Before the collapse, Bankman-Fried was one of the richest individuals in the world with a net worth of $16 billion, which then plummeted to around $100,000.
Things went from bad to worse for him when he was arrested in the Bahamas earlier this month and the outlook for his close associates is looking pretty gloomy too.
Caroline Ellison was the CEO of Alameda Research, another company that was part of Bankman-Fried's collapsing crypto empire which also filed for Chapter 11 bankrupcy.
However, the problems only started there as Reuters later reported that Bankman-Fried transferred around $10 billion in customer funds from FTX to Alameda, with up to $2 billion then going missing.
He said he 'disagreed with the characterization' of the money transfer, putting it down to them having 'confusing internal labeling and misread it'.
Ellison now faces up to 110 years in prison after agreeing a plea deal with prosecutors, having faced seven charges including wire fraud, conspiracy to commit wire fraud, conspiracy to commit commodities fraud, conspiracy to commit securities fraud and conspiracy to commit money laundering.
The combined maximum sentences for these charges is 110 years.
The plea deal document, dated 18 December, says Ellison will plead guilty to the seven charges laid against her and will also have to pay restitution, with the amount she will pay yet to be determined by a court.
In exchange she will not be prosecuted on any counts of possible criminal tax violation, and she will be expected to fully comply with all investigations both by the prosecution and other law enforcement agencies.
The 28-year-old will also have to provide documents, records, evidence and testimony at other trials if required to do so.
US officials have said that Ellison and FTX co-founder Gary Wang are cooperating with prosecutors.