FTX: The co-founder of FTX and former co-CEO of Alameda Research, Caroline Ellison and Gary Wang, both entered guilty pleas to federal charges on Wednesday.
The charges
According to US Attorney Damian Williams, the two FTX associates pleaded guilty in the Southern District of New York.
Gary Wang entered a guilty plea to the following offenses:
- Conspiracy to commit wire fraud
- Wire fraud
- Conspiracy to commit commodities fraud
- Conspiracy to commit securities fraud
However, Caroline Ellison’s list of accusations was longer and included the following:
- Two counts of wire fraud
- Two counts of conspiracy to commit wire fraud
- Conspiracy to commit commodities fraud
- Conspiracy to commit securities fraud
- Conspiracy to commit money laundering
The night Sam Bankman-Fried, the former CEO of FTX, was flying from the Bahamas to New York, their charges were made public.
He will be charged eight federal crimes by the same federal prosecutors who agreed to Ellison and Wang’s plea agreements.
Their plea deals were finalized on Monday before SBF was set to leave for the US following a chaotic court appearance in the Bahamas.
“As I said last week, this investigation is very much ongoing,” said Williams in a prerecorded message.
“I also said that last week’s announcement would not be our last. And let me be clear, once again, neither is today’s.”
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SBF
Sam Bankman-Fried was taken into custody last week in the Bahamas after being charged in the Southern District of New York.
He has been the subject of heated court proceedings over the past few days on whether or not he would consent to extradition to the US.
After a hectic courtroom scene on Monday in which a rumored plan for him to forgo his extradition to the US stalled, he was sent to a Bahamas jail.
Later that day, media reports said he had instructed his Bahamian attorney to move forward with the extradition proceedings.
Later this week, Sam Bankman-Fried is anticipated to return to court.
According to earlier reports, he would agree to extradition, but SBF provided a different account on Monday.
Before deciding to return to the US, he insisted on seeing a copy of his federal indictment.
Instead of handing himself over to US authorities, Bankman-Fried chose to go back to Fox Hill jail.
The SEC
Civil complaints were filed against Gary Wang and Caroline Ellison with the Commodity Futures Trading Commission and the Securities and Exchange Commission.
According to the SEC, a “multiyear scheme to defraud equity investors in FTX, the crypto trading platform co-founded by Samuel Bankman-Fried and Wang,” was involved.
Charges in the CFTC’s expanded complaint state:
“Ellison with fraud and material misrepresentations in connection with the sale of digital asset commodities in interstate commerce.”
Wang is accused of fraud “in connection with the sale of digital asset commodities in interstate commerce,” according to the indictment.
Wang and Ellison, according to the CFTC statement, agreed to the accusations leveled against them.
Caroline Ellison was singled out for manipulating FTT (FTX’s self-issued token) artificially to increase Alameda Research’s available collateral for loans.
According to the SEC, Ellison and Wang are cooperating with the continuing investigation.
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FTX and Alameda
Numerous loans from well-known cryptocurrency companies that sought bankruptcy protection, notably Voyager Digital and BlockFi Lending, were connected to Alameda Research.
However, Damian Williams didn’t go into depth about the accusations against Ellison and Wang.
According to the SEC, they helped Sam Bankman-Fried in their respective positions at Alameda and FTX allegedly swindle FTX clients.
A software backdoor that Wang allegedly built into the FTX platform allowed Alameda to transfer customer funds for its own trades.
Sam Bankman-Fried oversaw Alameda from 2021 until Sam Trabucco, who departed the organization in August 2022, and Caroline Ellison took over.
The second and third people accused in connection with the FTX collapse were Ellison, 28, and Wang, 29.
The 30-year-old Sam Bankman-Fried was charged with a federal offense earlier this month.
“Bankman-Fried and Wang thus gave Alameda and Ellison carte blanche to use FTX customer assets for Alameda’s trading operations and for whatever other purposes Bankman-Fried and Ellison saw fit,” said the SEC.
According to them, Trabucco wasn’t connected with any wrongdoing.
Meanwhile, Wang’s attorney released a statement, saying:
“Gary has accepted responsibility for his actions and takes seriously his obligations as a cooperating witness.”
References:
FTX founder Bankman-Fried sent back to Bahamas jail in day of courtroom chaos
