FTX co-founder and Alameda Research CEO plead guilty to fraud

• Former Alameda CEO Caroline Ellison and FTX co-founder Gary Wang.
• Ellison and Wang face civil fraud charges for their roles in multiyear plan.
• The SEC claims Wang developed software that allowed FTX .

Two of Sam Bankman-top Fried’s business partners pleaded guilty to fraud, a federal prosecutor in New York said Wednesday.

Former Alameda CEO Caroline Ellison and FTX co-founder Gary Wang are working with prosecutors, the U.S. attorney said.

U.S. Attorney Damian Williams said Ellison and Wang were charged for their roles in FTX’s scams.

Ellison’s guilty plea includes wire fraud, securities fraud conspiracy, and money laundering. Wang’s plea bargain includes wire fraud and conspiracy charges.

Gary has accepted responsibility for his acts and takes his role as a cooperating witness seriously, his counsel said.

Ellison’s lawyers didn’t immediately comment.

Ellison and Wang face civil fraud charges for their roles in a multiyear plan to mislead FTX investors.

They face CFTC fraud accusations.

The SEC claims Wang “developed FTX’s software code that allowed Alameda to redirect client monies” and Ellison used those funds for Alameda’s trading.

It further says that Ellison and Wang colluded with Bankman-Fried to shift FTX client monies to Alameda after realizing the company didn’t have enough assets to pay back customers.

Since FTX’s establishment in May 2019, the SEC claims some consumer cash flowed to Alameda.

Complaint: “Billions of FTX consumer monies were placed into Alameda-controlled bank accounts.”

The SEC said it had reached court-approved settlements with Wang and Ellison.

The criminal and civil allegations brought against the two top executives have disclosed additional facts about FTX’s breakdown, including how customer assets freely migrated from the crypto platform to Alameda, the hedge fund Bankman-Fried co-founded.

Bankman-Fried, 30, is accused of misappropriating billions of dollars from the bankrupt cryptocurrency exchange FTX.

Prosecutors labeled it a years-long fraud involving Bankman-hedge Fried’s fund.

Acting director of CFTC’s Enforcement Division says customers lost $8 billion.

Bankman-Fried made “tens of millions of dollars in illicit campaign contributions,” said U.S. Attorney Williams.

He’s charged with wire fraud, conspiracy, money laundering, and campaign finance violations.

SEC accuses early fraud.

SEC complaint: “From FTX’s inception, defendants and Bankman-Fried routed consumer monies to Alameda.”

The SEC accuses a complicated conspiracy to deceive investors and customers about FTX’s risk management.

Bankman-Fried and Wang, with Ellison’s knowledge and permission, exempted Alameda from risk mitigation measures and gave it preferential treatment on the FTX platform, including a virtually unlimited ‘line of credit’ backed by the platform’s consumers, the SEC said in its lawsuit.

“Bankman-Fried remained the ultimate decision-maker at Alameda” and FTX, the SEC lawsuit says.

Commodities Futures Trading Commission complaint alleges Bankman-Fried disguised trading responsibilities from Alameda in a client account on FTX he referred to as “our Korean friend’s account.”

The CFTC lawsuit states that Alameda’s $8 billion negative balance on FTX’s ledgers was no longer visible.

FTX was once worth $32 billion and the industry’s face. MIT-educated Bankman-Fried was a crypto genius.

U.S. Attorney Williams said Bankman-Fried was in FBI custody and being moved from the Bahamas, where he was detained Dec. 12.

Late Wednesday, he landed in Westchester.

He agreed to be extradited from the Bahamas, where he was arrested Dec. 12.

Williams said Bankman-Fried was in FBI custody and being brought to the U.S. NBC New York reports he landed late Wednesday.

Williams claimed the probe isn’t over.

Now is the time to address malfeasance at FTX or Alameda, he added. “We’re moving fast, and our patience is limited.”

Statement of U.S. Attorney Damian Williams on U.S. v. Samuel Bankman-Fried, Caroline Ellison, and Gary Wang pic.twitter.com/u1y4cs3Koz

— US Attorney SDNY (@SDNYnews) December 22, 2022

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