Two top associates of disgraced crypto executive Sam Bankman-Fried have pleaded guilty to criminal charges and are cooperating with US prosecutors leading the investigation into FTX’s collapse.
(Bloomberg) — Two top associates of disgraced crypto executive Sam Bankman-Fried have pleaded guilty to criminal charges and are cooperating with US prosecutors leading the investigation into FTX’s collapse.
The US Attorney for the Southern District of New York Damian Williams said in a statement on Wednesday night that Caroline Ellison and Gary Wang had been charged “in connection with their roles in the frauds that contributed to FTX’s collapse.”
“Both Ms. Ellison and Mr. Wang have pleaded guilty to those charges and they are both cooperating with the Southern District of New York,” Williams said in the video statement. The US Securities and Exchange Commission and Commodity Futures Trading Commission also announced separate lawsuits against Wang and Ellison.
The announcements came hours after FTX co-founder Sam Bankman-Fried, who was arrested in the Bahamas last week, consented to being extradited back to the US to face several criminal charges. He boarded a private plane with FBI agents bound for New York on Wednesday night. Bankman-Fried is expected to appear in federal court in Manhattan on Thursday.
“Let me reiterate a call I made last week,” Williams said. “If you participated in misconduct at FTX or Alameda, now is the time to get ahead of it. We are moving quickly and our patience is not eternal.”
The SEC alleged Ellison and Wang participated in a multiyear scheme to defraud FTX investors. Between 2019 and 2022 Ellison — at the direction of former FTX CEO Sam Bankman-Fried — manipulated the price of FTX’s native token FTT by purchasing large quantities in the open market, according to the SEC complaint. The agency also alleged that Ellison and Wang knew or should have known Bankman-Fried was falsely touting FTX as a safe crypto trading platform, while at the same time improperly transferring customer funds from FTX to Alameda.
The SEC said Ellison and Wang are cooperating with its ongoing investigation into other potential individuals or entities tied to the misconduct at FTX.
The CFTC’s lawsuit, which also alleges fraud, accused Ellison of directing Alameda to use billions of dollars of FTX funds, including customer funds, for trades on other crypto exchanges and to pay for high-risk investments. According to a CFTC news release, Wang “created features in the code underlying the FTX trading platform that allowed Alameda to maintain an essentially unlimited line of credit on FTX.” The CFTC said the two former executives didn’t contest their liability on the CFTC’s claims.
(Updates with details on suits.)
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