Sam Bankman-Fried Associates Caroline Ellison, Gary Wang Plead Guilty to U.S. Charges

Two former lieutenants in the fallen kingpin Sam Bankman-Fried’s Crypto Empire pleaded guilty and is cooperating with federal prosecutors investigating the FTX crash, officials said late Wednesday.

Caroline Ellison, former chief executive of Alameda Research and one-time lover of Bankman-Fried, and Gary Wang, co-founder of a $32 billion crypto exchange, have been charged with “involving in connection with the crime.” Their role in the scams contributed to the downfall of FTX,” said US Attorney for the Southern District of New York Damian Williams in a short video. Address.

Ellison, 28 years old, pleaded guilty to seven counts, including wire fraud and conspiracy to commit securities fraud, under a plea agreement obtained by The Wall Street Journal. Seven counts carry a maximum sentence of 110 years in prison

Vuong, 29, pleaded guilty to four counts: wire fraud, conspiracy to commit wire fraud, conspiracy to commit commodity fraud and conspiracy to commit securities fraud. He faces 5 decades behind bars.

Ellison’s attorney declined to comment on the matter to the newspaper. In a statement, Wang’s attorney, Ilan Graff, said: “Gary has accepted responsibility for his actions and taken seriously his duties as a cooperating witness.”

Williams emphasized in her video statement that the pair are unlikely to be the last people targeted in the ongoing investigation.

“Let me reiterate a call I made last week: If you have engaged in misconduct at FTX or Alameda, now is the time to get over it,” he said. “We are moving fast, and our patience is not eternal.”

Ellison and Wang were also charged by the US Securities and Exchange Commission in a civil lawsuit “for their role in a multi-year scheme” to defraud investors of FTX, the agency. said in a statement. a separate statement on Wednesday.

Calling the pair “active participants” in a conspiracy to deceive FTX investors, the SEC outlined the alleged conspiracy: Wang would illegally transfer FTX client assets to Alameda, that Ellison will use to promote the company’s trading. And Bankman-Fried used those client funds to make undisclosed venture investments, lavish property purchases and major political donations, the agency said. Amendment complaint.

Wang and Bankman-Fried, “with Ellison’s knowledge and consent,” also granted Alameda “substantial special treatment on the FTX platform,” essentially giving the company “a ‘line of credit’ virtually unlimited applications sponsored by the platform’s customers,” the complaint explains.

According to the SEC, Ellison is also responsible for artificially inflating the value of FTT, the self-issued tokens that FTX gave out to Alameda for free, by acquiring them on various platforms. In turn, this would make the FTT used as collateral for Alameda’s loans more valuable, allowing her to borrow billions of dollars more, investigators wrote in the lawsuit.

SEC Chairman Gary Gensler said: “When FTX and the rest of the card house collapsed, Mr Bankman-Fried, Ms. Ellison and Mr. Wang let investors hold the bag.

Despite Bankman-Fried’s insistence that he was “shocked” by the collapse of what he considered “a thriving business,” and that he was unaware of the extent of illegal activity going on at Alameda, federal officials have alleged that he and those close to him knew exactly what they were doing. do.

In Complaints are made public Earlier this month, the Commodity Futures Trading Commission said that Bankman-Fried and his top executives at both Alameda and FTX had “extensive access to each other’s systems and accounts.” In addition to the allegedly co-mixed funds, the nominally separate groups also share “key personnel, technology and hardware, intellectual property and other resources,” the CFTC said.

An important step forward in the Bankman-Fried, Ellison and Wang plead case comes amid reports that the disgraced tycoon has been transferred to US custody after being extradited from the Bahamas, where he was arrested in the first day of this month.

After being fly to New York—along with federal agents—the 30-year-old is expected to make his first court appearance in Manhattan as soon as Thursday.