Caroline Ellison, the former CEO of Alameda Research and a key figure in the FTX scandal, is no longer behind bars.
The records of the Bureau of Prisons of the United States show that Ellison has been transferred from federal prison to the Residential Reentry Management (RRM) in New York. This marks the transition from incarceration to a form of community confinement.
What does RRM status really mean
According to the inmate locator system of the Bureau of Prisons, Ellison remains in federal custody with a projected release date of February 20, 2026. However, her current status confirms that she is no longer in a correctional facility.
The RRM — acronym for Residential Reentry Management — manages the final phase of a federal sentence. Individuals assigned to RRM can be placed in a halfway house or under house arrest instead of in prison.
Although still under the supervision of the Bureau of Prisons, inmates face fewer physical restrictions and may be authorized to work, maintain limited social contact, and prepare for reintegration.
Unlike prison, being placed under RRM involves no cell, no guard, and much more autonomy, although there remain strict monitoring and strong movement restrictions.
Ellison's transfer signals that she has entered the reintegration phase of her sentence, not that she has been released.
Ellison's role in the collapse of FTX
Ellison pleaded guilty in 2022 to several federal charges of fraud related to the misuse of FTX customer funds.
As CEO of Alameda Research, the trading arm closely linked to FTX, he admitted to having conducted operations and financial maneuvers based on billions of dollars in customer deposits.
Prosecutors and the court, however, drew a clear distinction between Ellison's role and that of Sam Bankman-Fried, founder of FTX and architect of the systems that made the fraud possible. Ellison did not have control over the infrastructure of the FTX exchange, the customer custody mechanisms, or governance.
Her cooperation proved decisive. Ellison became the key witness for the prosecution, providing in-depth testimony that aided in the conviction of Bankman-Fried. In 2024, a federal judge sentenced her to two years in prison citing her cooperation, timely admission of guilt, and subordinate role.
A stark contrast with Do Kwon
Ellison's release from prison comes as Terraform Labs co-founder Do Kwon begins serving a 15-year federal sentence in the United States for fraud related to the collapse of the TerraUSD stablecoin.
Prosecutors argued that Kwon knowingly misled investors about the stability of Terra's algorithmic peg, causing estimated losses of over 40 billion dollars.
Unlike Ellison, Kwon was a founder, public promoter, and architect of the system at the center of the collapse. The difference in sentencing reflects how courts distinguish between those who design a system and those who manage it.
Too lenient or legally coherent?
Ellison's transition to community confinement is a routine legal procedure but charged with political tension. For critics, it reinforces the perception of a lack of fairness in the accountability of crypto scandals.
For prosecutors, however, it reflects the already established principles of sentencing: cooperation, reduced authority, and taking responsibility.
For now, Ellison remains under federal supervision. But her release from prison, even if temporary, raises a constantly relevant question: who really pays the price when crypto empires collapse?
