A version of this story appeared in CNN Business' Nightcap newsletter. To get it in your inbox, sign up for free, Here.

new York
CNN
—

A federal judge sentenced the ex-girlfriend of FTX co-founder Sam Bankman-Fried to two years in prison, citing her extensive cooperation with prosecutors that led to the conviction of the former face of the cryptocurrency industry in one of the largest financial frauds in U.S. history.

Judge Lewis Kaplan noted Caroline Ellison’s “very, very extensive cooperation.”

Ellison told the judge: “I think on some level my brain can't even really comprehend the extent of the damage it has caused. That doesn't mean I'm not trying. I'm so sorry.”

“I am deeply ashamed of what we did,” she added, sniffling and her voice breaking. Ellison's parents and two sisters sat behind her as the verdict was read.

A short summary:

Ellison's testimony at Bankman-Fried's trial last fall was crucial.

In a memo to Judge Lewis Kaplan last week, prosecutors praised Ellison's candor and “substantial assistance” in the investigation – a fact that played a role in her conviction, even though she faced a similar list of charges as Bankman-Fried.

And on Tuesday, Kaplan noted that Ellison incriminated herself while testifying and “didn't mince her words.” He also drew comparisons to Bankman-Fried, whom he sentenced to 25 years in prison, noting that Ellison was guilty of fraud, but said what set her apart was Ellison's “remarkable cooperation.”

From the beginning, Ellison was the prosecution's star witness – someone who worked hand-in-hand with Bankman-Fried and kept a diary documenting the ups and downs of their business and often difficult love affair. And in a trial that involved technical, complex issues like digital assets and decentralized finance, Ellison's testimony offered an emotional and relatable narrative.

During her three days on the witness stand, Ellison, 29, repeatedly emphasized that during her years in Alameda, the responsibility lay with Bankman-Fried. When asked who had directed her to carry out various criminal or other acts, she frequently replied, “It was Sam.”

Of course, some critics, including Bankman-Fried's defense attorneys, have noted that while Ellison may have been a compelling witness, she was not a whistleblower.

“There is no doubt that she deserves leniency,” wrote Dennis Kelleher, president of the nonprofit Better Markets. But at the same time, he said, “she could have single-handedly stopped this fraud at any time, long before billions of dollars were lost, hundreds of investors were defrauded, and tens of thousands of customers were ripped off.”

When FTX collapsed, customers were unable to use their trading accounts. But surprisingly, FTX's bankruptcy trustees announced that they had recovered enough assets to repay most creditors in full and with interest, thanks to a rise in the value of cryptocurrency holdings.

Legal experts had previously told CNN that it was unlikely that Ellison would end up in prison.

In the Southern District of New York, where the case was heard, “the vast majority of white collar criminals do not receive prison time,” said Jordan Estes, a former federal prosecutor who is now a partner at Kramer Levin. And that is especially true if they have otherwise led law-abiding lives, she added.

Josh Naftalis, also a former prosecutor, noted that “a key aspect that Kaplan will consider in sentencing Ellison is whether the magnitude of the fraud – billions in losses – still requires a prison sentence.” Although Naftalis, now a white collar criminal defense attorney at the New York law firm Pallas, added that prosecutors have described her cooperation as “extraordinary,” a prison sentence seems unlikely.

However, in handing down the verdict on Tuesday, the judge said he could not give her a get-out-of-jail-free card in such a serious case.

The cases of other FTX executives are still pending.

Ryan Salame, a former FTX executive, was sentenced to more than seven years in prison after pleading guilty to violating campaign finance laws and operating an unlicensed money transmission business. Two other former executives, Nishad Singh and Gary Wang, who took a plea deal and testified against Bankman-Fried, are scheduled to be sentenced in the fall.