The ex-girlfriend of disgraced cryptocurrency tycoon Sam Bankman-Fried and a co-founder of FTX have both pled guilty to fraud charges in connection with the collapse of the cryptocurrency exchange and are collaborating with federal prosecutors, according to an announcement made Wednesday night.
Caroline Ellison, the former CEO of Bankman-crypto Fried’s hedge fund firm Alameda Research, and Gary Want, a co-founder of FTX, pleaded guilty to the criminal offenses prior to Bankman-return Fried’s to New York to face his own charges, Manhattan US Attorney Damian Williams said in a statement issued Wednesday night.
Williams stated that the allegations filed against the pair were “in connection with their roles in the scams that resulted to FTX’s demise.”
“Both Ms. Ellison and Mr. Wang have pleaded guilty and are cooperating with the Southern District of New York”
The allegations were revealed when Bahamian officials transferred Bankman-Fried to FBI custody. The US attorney stated that he was flown back to New York and will appear before a judge in the district “as soon as feasible.”
Caroline Ellison, age 28, was the chief executive officer of Alameda Research.
Prosecutors believe that Bankman-Fried, the former CEO of FTX, concealed the company’s financial difficulties from the public and cheated investors out of more than $1.8 billion.
The Securities and Exchange Commission accused Bankman-Fried of fraudulently using investor funds to fund Alameda and purchase real properties for his family. Additionally, he is accused of wire fraud, money laundering, and campaign finance violations.
Williams has called the fall of FTX as one of the “worst financial frauds in U.S. history.” At one point, the corporation was projected to be worth $32 billion.
Gary Wang and Bankman-Fried established FTX. Crunchbase
He stated that his office’s probe is ongoing but “moving swiftly” and urged former employees of Bankman-crypto Fried’s empire to come forward before they are apprehended by federal authorities.
“Permit me to reaffirm a statement I made last week: if you engaged in misconduct at FTX or Alameda, now is the moment to rectify the situation. We are moving swiftly, and our patience will not last forever,” he stated firmly.
According to the deal, Ellison pled guilty to seven counts of misleading consumers and investors of both FTX and Alameda. The charges entail a potential sentence of 110 years in prison.
In accordance with the plea agreement, she was freed on a $250,000 bail and is prohibited from leaving the country. According to court records, she must also pay court-determined reparations.
Wang pleaded guilty to four charges, which included wire fraud, conspiracy to commit wire fraud, and conspiracy to commit commodities and securities fraud. The charges carry a potential punishment of 50 years in jail. Regarding his office’s inquiry, Williams stated, “We continue to work around-the-clock, and we are far from done.”
Ellison and Wang are not the only FTX employees who have turned against Bankman-Fried. Ryan Salame, a senior officer at FTX, informed securities regulators in the Bahamas on November 9 that funds belonging to FTX clients were moved to Alameda to cover the hedge fund’s losses, according to a document published during FTX’s bankruptcy proceedings in Delaware.
FTX filed for bankruptcy on November 11. The following day, Bankman-Fried resigned as CEO.
Bankman-Fried, Ellison, and Wang apparently participated in a “Wire Fraud”-themed FTX inner-circle group chat. In his penultimate tweet before his arrest in the Bahamas, Bankman-Fried acknowledged that he could not rule out the existence of such a group chat, though he was not a participant.
Bankman-Fried resigned as chief executive officer of FTX on November 11, the day the business filed for bankruptcy.
Legal experts suspected that 28-year-old Ellison was cooperating with federal authorities to turn on her ex-boyfriend. Last week, she was reportedly spotted in New York City.