Caroline Ellison, former CEO of Alameda Research and a central figure in the FTX scandal, is no longer behind bars.
The US Bureau of Prisons indicates that Ellison has been transferred from federal prison to Residential Reentry Management (RRM) in New York. This marks a shift from incarceration to community-based supervision.
What RRM status actually means
According to the Bureau of Prisons overview, Ellison is still in federal custody, with an expected release date of February 20, 2026. However, her current status confirms that she is no longer placed in a correctional facility.
RRM — short for Residential Reentry Management — oversees the final phase of a federal sentence. Individuals subject to RRM may be placed in a halfway house or house arrest instead of prison.
Although she is still under the supervision of the Bureau of Prisons, inmates have fewer physical restrictions and may be allowed to work, have limited social contact, and prepare for reintegration.
Unlike prison, stays under RRM have no cells, no guards, and significantly more autonomy, although strict supervision and movement restrictions remain.
Ellison's transfer indicates that she has entered the reintegration phase of her sentence and that she is not released.
Ellison's role in the FTX collapse
Ellison pleaded guilty in 2022 to multiple federal counts of fraud related to the misuse of FTX customer funds.
As CEO of Alameda Research, the trading arm closely tied to FTX, she admitted that she had executed trades and financial maneuvers based on billions of customer deposits.
However, the prosecution and the court made a clear distinction between Ellison's role and that of FTX founder Sam Bankman-Fried, who designed the systems that enabled the fraud. Ellison did not control the FTX exchange's infrastructure, customer asset solutions, or governance systems.
Her cooperation proved crucial. Ellison became the state's key witness and provided extensive explanations that helped convict Bankman-Fried. In 2024, a federal judge sentenced her to two years in prison, based on her willingness to cooperate, early confession, and subordinate role.
A stark contrast to Do Kwon
Ellison's transition out of prison coincides with Terraform Labs co-founder Do Kwon beginning to serve a 15-year sentence in the U.S. for fraud related to the collapse of the TerraUSD stablecoin.
The prosecution argued that Kwon deliberately misled investors about the stability of Terra's algorithmic peg, leading to estimated losses of over $40 billion.
Unlike Ellison, Kwon was an entrepreneur, a public figure, and the architect behind the system at the center of the collapse. The difference in sentencing shows how the courts distinguish between system designers and operators.
Too lenient or legally consistent?
Ellison's transition to community confinement is a legal routine but politically controversial. For critics, it reinforces the impression of unequal accountability in crypto scandals.
For the prosecution, it reflects established principles: cooperation, reduced authority, and acceptance of responsibility.
So far, Ellison is still under federal supervision. But her temporary release from prison has once again raised the question — who really foots the bill when crypto empires collapse?
