⚖️ Caroline's fate

So long to Caroline Ellison for a while. We predict a genre-redefining series of novels on the other side of her confinement.

• Bitcoin has broken $65,000 again. Email us with your vibes (or leads): crypto@axios.com
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Today's newsletter is 773 words, a 3-minute read.

Caroline Ellison was sentenced Tuesday by a federal judge to two years in prison for her role in the FTX cryptocurrency scandal.

Between the lines: Ellison arguably was the most important witness in the prosecution of FTX founder Sam Bankman-Fried, and her relatively lenient sentence reflected her cooperation.

• "I've seen a lot of cooperators in 30 years. I've never seen one quite like Ms. Ellison," Judge Lewis Kaplan said.

Catch up quick: Ellison was a one-time girlfriend of Bankman-Fried, better known as SBF, and CEO of the first company he founded, hedge fund Alameda Research.

• She detailed how SBF directed her to prepare fake balance sheets to send to her lenders.

What they're saying: "Not a day goes by that I don't think about all of the people I hurt," Ellison told the court at Tuesday's sentencing. "I participated in a criminal conspiracy that ultimately stole billions of dollars from people who entrusted their money with us."

• "I'm sorry I wasn't brave," she added.

What we're watching: Whether she ends up with any super interesting roommates, as the man who led her to this point has.

💭 Our thought bubble: Everyone (the prosecutors, the judge) sang Ellison's praises Tuesday, and yet she got time. So it is hard to imagine that co-collaborators Gary Wang and Nishad Singh won't also see similar time.

Go deeper

It passed the House in May, but the only bill to delineate regulators for different kinds of cryptocurrencies didn't get sent to the Senate until September.

The latest: Financial Innovation and Technology for the 21st Century Act (HR 4763, a.k.a.: Fit21) has finally been sent from the south wing of the U.S. Capitol Building to the north wing, where it was passed on to the Senate Banking Committee, according to Congress.gov.

• There it will surely die.

The issuers of the stablecoin TrueUSD (TUSD) were not honest about what was backing it, according to a complaint that preceded a settlement with the SEC, which was announced Tuesday.

Why it matters: Stablecoins that say they are based on 1-to-1 backing with U.S. dollars need to have those dollars on hand.

Friction point: TrueUSD was not, the SEC alleges, backing its tokens with dollars, at least not entirely.

• Instead, it was heavily investing deposits into some kind of commodity fund, presumably to earn profits for the issuer.
• But that's not how the complaint says it represented the backing to its customers.

💭 Our thought bubble: I wrote about TrustToken's initial fundraise six years ago, when it was offered on the token sales site that was pickiest about projects it would support, CoinList.

• But its stablecoin always lagged the market leaders (despite decent uptake) and, in 2020, it announced a sale to "an Asian consortium" that just seemed very off.
• Note that the period the SEC criticizes starts just a few weeks before that announcement.

By the numbers: There's still almost a half-billion in TUSD in the market, but that's well down from the nearly $4 billion in supply it once represented.

The bottom line: The payments weren't very high in this case, a few hundred thousand dollars between various entities.

• But we still don't really know who took the project over.

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💬 Sen. Elizabeth Warren is softening on digital assets amid Harris campaign's shift. (Semafor)

🏦 BNY Mellon won an exemption from the SEC's much-maligned SAB 121. (Bloomberg)

🇳🇬 Former government employees rallied at the UN for jailed Binance executive. (CoinDesk)

🛰️ Worldcoin causes fistfights. (DL News)

Investor and TV personality Mark Cuban says that Vice President Kamala Harris plans to chart a different course on consumer protection in the digital asset space.

Worth your time: The video Cuban shared from Rep. Ritchie Torres (D-NY). (It's from the same hearing as the next card.)

• Torres makes a connection between Yankees tickets and the Stoner Cats NFT-for-cartoons case, but SEC chair Gary Gensler refused to discuss the details of the case, even though it is settled and done.

💭 Our thought bubble: Appointees who won't discuss specifics with elected officials provide little transparency.

• 🍊 No one needs to hear another rundown of the Howey Test at this point.

We all thought stablecoin legislation was coming any day in 2022, but then... 🦗🦗🦗.

What we're watching: Word on that grand bargain.

Reach CTOs, CIOs and tech leaders with Axios.

We'll help you tell your story in the right way:

• We'll distill your brand's message into its most effective form with Smart Brevity.
• No clutter, no filler — just clean, smart and effective.

Contact us to learn more.

This newsletter was edited by Pete Gannon and copy edited by Carolyn DiPaolo.

💳 It's crazy how much Visa dominates the debit market. —Brady