FTX Reaches Deal With Caroline Ellison for Cash, Cooperation

Caroline Ellison has agreed to transfer nearly all of her available cash and assets to FTX Trading Ltd. to settle a bankruptcy court lawsuit and further extricate herself from Sam Bankman-Fried’s former cryptocurrency empire.

Ellison, who served as CEO of FTX-related hedge fund Alameda Research Ltd. and had been romantically involved with Bankman-Fried before FTX collapsed, agreed to hand over substantially all she can to the company and its creditors, according to papers filed Monday in the US Bankruptcy Court for the District of Delaware.

The deal settles litigation filed last year to recover about $30 million in payments and FTX securities that were transferred to Ellison before the company’s collapse in November 2022. The agreement was filed the same day that the defunct crypto exchange won bankruptcy court approval of plan to repay customers whose digital assets had been trapped on the platform.

Ellison, who last month was sentenced to serve two years in prison for her role in a multibillion-dollar scheme that hid looted customer funds, was a star witness against Bankman-Fried and has been lauded for pleading guilty and cooperating with federal prosecutors.

As part of her deal with FTX, Ellison will hand over the bulk of what she has left following federal government forfeitures and legal payments. She also agreed to cooperate with professionals winding down the estate and help generate more value for creditors, according to the agreement.

“Following the settlement, Ellison will have no remaining assets other than certain physical personal property,” FTX said in its request for court approval of the deal. “Significantly, Ellison has also committed to cooperating with the Debtors in ongoing investigations and litigation—a benefit that the Debtors would not be able to obtain even if they prevailed at trial against Ellison.”

A hearing is scheduled for Nov. 20.

FTX, Alameda and related entities have been under the control of CEO John J. Ray III since the bankruptcy began.

FTX is represented by Sullivan & Cromwell LLP and Landis Rath & Cobb LLP. Ellison is represented by Wilmer Cutler Pickering Hale & Dorr LLP.

The case is In re FTX Trading Ltd., Bankr. D. Del., No. 22-11068, motion filed 10/7/24.