Caroline Ellison and Gary Wang: FTX co-founder and ex-chief of hedge fund Alameda Research each pleaded guilty to multiple charges, are cooperating with fed



CNN

Two senior executives associated with FTX crypto exchange collapsed pleaded guilty to multiple criminal charges and are cooperating with federal prosecutors, according to unsealed court records. Additionally, the pair are facing civil fraud charges from the Securities and Exchange Commission which were announced Wednesday night.

Gary Wang, the co-founder of FTX, and Caroline Ellison, who served as CEO of hedge fund Alameda Research, pleaded guilty to multiple counts of conspiracy and fraud for their role in the fraud scheme that led to the collapse of the crypto-trading platform.

Damian Williams, U.S. Attorney for the Southern District of New York, announced the charges in a video message late Wednesday. In a brief statement, he reiterated that the investigation is still ongoing, noting in particular that these new charges in the case are not the last.

Ilan Graff, an attorney for Wang, said, “Gary has accepted responsibility for his actions and takes his obligations as a cooperating witness seriously.” Wang has already appeared in court for his guilty plea.

Ellison’s attorneys could not immediately be reached for comment.

The charges were unsealed as Sam Bankman-Fried was on his way to the United States of the Bahamas, where he was arrested last week on an eight-count indictment for what Williams called one of the biggest financial frauds in American history. Bankman-Fried on Wednesday waived his right to challenge the extradition and boarded a plane for the United States in the early evening.

Bankman-Fried is scheduled to appear before a judge in Manhattan on Thursday. Prosecutors and his lawyers have been discussing a bond that would allow him to avoid detention, people familiar with the matter told CNN.

Wang co-founded FTX with Bankman-Fried in 2019 and also worked with him at his hedge fund Alameda Research. Ellison became CEO of Alameda in October 2021, according to court documents.

Prosecutors allege that Bankman-Fried engaged in multiple fraudulent schemes. Among them, they allege that Bankman-Fried stole money from FTX clients to prop up Alameda, invested in other companies, bought luxury real estate, and donated tens of millions of dollars to corporations. political campaigns.

In letters dated Sunday, Dec. 18 and signed the next day, Ellison and Wang agreed to plead guilty and cooperate with prosecutors.

Ellison pleads guilty to seven counts, including wire fraud, conspiracy to commit money laundering, conspiracy to commit securities fraud, conspiracy to commit commodity fraud and conspiracy to to commit electronic fraud. She is charged with the same crimes as Bankman-Fried, except for campaign finance charges.

Wang agreed to plead guilty to four counts: wire fraud, conspiracy to commit wire fraud, conspiracy to commit commodity fraud, and conspiracy to commit securities fraud.

“As I said last week, this investigation is ongoing and moving very quickly,” Williams said. “I also said last week’s announcement wouldn’t be the last and let me be clear, again, neither will today’s announcement.”

Federal regulators have also accused Ellison and Wang of playing leading roles in a year-long scheme to defraud FTX investors.

The Securities and Exchange Commission alleges that Ellison and Wang actively participated in a “scheme to defraud” investors. Between 2019 and 2022, Ellison manipulated the price of FTT, FTX’s security token, “at the direction of” Bankman-Fried, according to regulators. The SEC said this manipulation was carried out by buying large amounts of FTT on the open market to support its price.

Regulators say the alleged manipulation inflated Alameda’s holdings, exaggerated the hedge fund’s balance sheet and “misled” investors about FTX’s risk exposure.

“When FTT and the rest of the house of cards collapsed, Mr. Bankman-Fried, Ms. Ellison and Mr. Wang let investors hold the bag,” said SEC Chairman Gary Gensler. said in a press release.

Wang created FTX source code that allowed Alameda to embezzle funds from FTX clients and Ellison used embezzled funds for the hedge fund’s trading activity, according to the SEC.

“Ellison and Wang actively participated in the scheme to deceive FTX investors and engaged in behavior critical to its success,” the SEC said. said in a press release.

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