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FTX: On Wednesday, Caroline Ellison, the former co-CEO of Alameda Research, and Gary Wang, a co-founder of FTX, both entered guilty pleas to federal charges.
The charges
The two FTX associates pleaded guilty in the Southern District of New York, according to US Attorney Damian Williams.
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 was accused of more, including 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 evening before Sam Bankman-Fried, the former CEO of FTX, was scheduled to depart from the Bahamas for New York, their charges were made public.
He is prosecuted with eight federal felonies by the same federal prosecutors who authorized the plea bargains for Ellison and Wang.
Prior to SBF’s anticipated departure for the US after a contentious court appearance in the Bahamas, their plea deals were finalized on Monday.
“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 charged in the Southern District of New York following his arrest in the Bahamas the previous week.
Intense court hearings have been going on for the last few days regarding whether or not he would consent to his extradition to the US.
After a tense courtroom exchange on Monday, in which a reported plan for him to resist his extradition to the US stalled, he was taken to a Bahamas jail.
Media reports state that later that day, he gave his Bahamian attorney instructions to start the extradition procedure.
Later this week, Sam Bankman-Fried will make another court appearance.
According to earlier reports, he would agree to extradition, but SBF on Monday provided a different account.
Before deciding to return to the US, he insisted on viewing a copy of his federal indictment.
Bankman-Fried, however, chose to stay in jail rather than hand himself in to US authorities.
The SEC
Gary Wang and Caroline Ellison were the targets of civil lawsuits from the Securities and Exchange Commission and the Commodity Futures Trading Commission, respectively.
The cryptocurrency trading platform FTX, which Samuel Bankman-Fried and Wang co-founded, was the target of a “multiyear scheme to defraud equity investors,” according to the SEC.
The following allegations are contained in the CFTC’s expanded complaint:
“Ellison with fraud and material misrepresentations in connection with the sale of digital asset commodities in interstate commerce.”
Wang is charged with fraud “in connection with the sale of digital asset commodities in interstate commerce,” according to the indictment.
Wang and Ellison allegedly agreed to the accusations against them, according to the CFTC statement.
Caroline Ellison was singled out for intentionally manipulating FTT (FTX’s self-issued token) to enhance Alameda Research’s available collateral for loans.
According to the SEC, Ellison and Wang are cooperating with the investigation.
Read also: Core Scientific joins list of crypto companies filing for bankruptcy
FTX and Alameda
Numerous loans from well-known cryptocurrency companies that declared bankruptcy, most notably Voyager Digital and BlockFi Lending, were connected to Alameda Research.
Damian Williams didn’t go into detail about the accusations against Ellison and Wang.
According to the SEC, they allegedly helped Sam Bankman-Fried cheat FTX clients while serving in their respective roles at Alameda and FTX.
Alameda purportedly gained access to user funds via the FTX platform through a backdoor Wang allegedly added to the software.
Before Caroline Ellison and Sam Trabucco took over in 2021 (Trabucco left the company in August 2022), Sam Bankman-Fried served as Alameda’s CEO.
The second and third people charged concerning the FTX collapse were Ellison, 28, and Wang, 29.
This month, Sam Bankman-Fried, 30, was charged with a federal crime.
“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.
They said that Trabucco was not connected to any misconduct.
During this time, Wang’s lawyer issued the following statement:
“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
