June 18, 2024

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Caroline Ellison and FTX co-founder Gary Wang pleaded guilty to fraud

Caroline Ellison and FTX co-founder Gary Wang pleaded guilty to fraud

Two former CEOs Sam Bankman Fried’s cryptocurrency trading empire The Attorney General for the Southern District of New York pleaded guilty Wednesday night to federal criminal fraud charges and they are cooperating in the case against the shady businessman.

The two Caroline Ellisonwho was the CEO of a cryptocurrency trading company Alameda Researchand Gary Wang, founder of the cryptocurrency exchange FTX. They were key associates in Mr. Bankman-Fried’s vast business empire, which was based primarily on FTX and Alameda, two companies he founded and managed.

The SEC also filed civil fraud charges against Ms. Ellison and Mr. Wang on Wednesday. The SEC said Ms. Ellison, 28, had misused deposits from FTX clients to fund Alameda’s trading activity and that Ms. Wang, 29, had set up a program that allowed the transfer of funds. The SEC case builds on the civil charges filed against Bankman Fred, 30, this month.

The guilty pleas and co-operation agreements are a major advance in the criminal fraud case against Mr Bankman Fried, who is in US custody after Acceptance of delivery from the Bahamas earlier on Wednesday.

The combination of criminal and civil charges against the former top executives puts Mr. Bankman-Fried in an even more precarious legal position, as the federal government said he oversaw a years-long massive fraud that transformed him from one of the most powerful people in the world. The cryptocurrency industry has led to a criminal defendant who could potentially face decades in prison.

United States attorneys general and federal regulators said Bankman-Fred carried out a scam It has transferred billions of customer money for other uses, including buying real estate in the Bahamas, trading cryptocurrency in Alameda, making campaign donations, and investing in other crypto companies. Prosecutors allege he defrauded clients, investors and lenders of his cryptocurrency business before it collapsed into bankruptcy last month.

The fee was also a huge blow to the crypto industry, which has been reeling over the past year as cryptocurrencies like Bitcoin plunged in price and companies filed for bankruptcy. The collapse of FTX and accusations of fraud destabilized customers for other trading platforms, who were assured that their funds were safe and protected.

The guilty pleas by Ms. Ellison and Mr. Wang could prompt other former executives to cooperate with authorities in the case against Mr. Bankman Fried, which has been charged with fraud, money laundering and campaign finance crimes.

The US attorney, Damian Williams, said Mr. Wang and Ms. Ellison were charged “in connection with their roles in the fraud that contributed to the collapse of FTX.”

Mr. Williams also repeated a point he made last week when the criminal charges against Mr. Bankman-Fried were announced. “If you engaged in misconduct at FTX or Alameda, now is the time to move on,” Mr. Williams said. “We move quickly and our patience is not eternal.”

Within two weeks Media raids Before arrest him On December 12, Mr. Bankman-Fred claimed he had done nothing wrong and had no intention of defrauding anyone. He also claimed that he was completely unaware of what was happening in Alameda.

In his statement, Mr. Williams said Mr. Bankman-Fred was in FBI custody and would be returned to the United States, brought before a judge as soon as possible. He is expected to appear in Federal District Court in Manhattan on Thursday.

Lawyers for Ms. Ellison declined to comment. “Gary has accepted responsibility for his actions and takes his obligations as a cooperating witness very seriously,” said Ilan Graf, attorney for Mr. Wang.

Bankman spokesman Fred declined to comment.

In her complaint, the SEC said Ms. Ellison, at the direction of Mr. Bankman-Fried, manipulated the price of a digital currency created by FTX, called FTT, by purchasing large amounts of the cryptocurrency token to support its price.

Alameda was one of the big companies that was trading FTT and used the crypto token as collateral for the loans it got from other big crypto companies to fund its trading.

Mr. Bankman-Fried, Ms. Ellison and Mr. Wang “were active participants in a scheme to hide material information from FTX investors, including through efforts by Mr. Bankman-Fried and Ms. Ellison to support the value of FTT,” said Sanjay Wadhwa, deputy director of the SEC’s enforcement division. artificially.”

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Mrs. Ellison was a key figure in Mr. Bankman Fried’s business empire. She and Mr. Bankman Fried were sometimes romantically involved, and lived together in a five-bedroom penthouse in the Bahamas, where FTX was headquartered.

Mrs. Ellison met Mr. Bankman-Fried at the Jane Street quantitative trading firm, where she worked after graduating from Stanford University. Both were involved in Effective Altruism – a community focused on using data to maximize the long-term impact of charitable donations.

Mr. Bankman Fried left Jane Street and eventually founded Alameda in 2017. Ms. Ellison joined him in 2018 and quickly became a member of his inner circle. She followed him to Hong Kong, and took over as CEO of Alameda after Mr. Bankman-Fried founded FTX with Mr. Wang.

Even as she became a powerful figure in the nascent crypto industry. Mrs. Ellison has never really believed in technology. “I think a lot of crypto projects don’t have much real value,” she said He said on FTX’s official podcast in early 2021. She got into the world of crypto, as she explains in another episode, because she was hoping to make a lot of money to donate as part of her commitment to effective altruism.

As FTX collapsed, Ms. Ellison rounded up a group of Alameda employees who were working out of the company’s Hong Kong office, and admitted that the company used customer deposits to fill shortfalls in its accounts, according to a person familiar with the matter.

A former Google software engineer, Mr. Wang, a graduate of MIT, was one of Mr. Bankman Fried’s closest confidants at FTX. The couple lived together in a luxury apartment complex in the Bahamas.