Caroline Ellison and Gary Wang: FTX co-founder and former head of Alameda Research hedge fund pleaded guilty to multiple charges, are cooperating with the Fed



CNN

Two senior executives associated with collapsed crypto exchange FTX They have pleaded guilty to multiple criminal charges and are cooperating with federal prosecutors, according to open court records. In addition, the couple faces civil fraud charges from the Securities and Exchange Commission that were announced Wednesday night.

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

Damian Williams, the US Attorney for the Southern District of New York, announced the charges in a video message Wednesday night. In a brief statement, he reiterated that the investigation is still ongoing, noting specifically that these new charges in the case are not the latest.

Ilan Graff, Wang’s lawyer, 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 revealed as Sam Bankman-Fried was heading to the United States from the Bahamas, where he was arrested last week on an eight-count indictment for what Williams called one of the biggest financial frauds in US history. Bankman-Fried waived his right to challenge extradition on Wednesday and boarded a plane for the United States in the early afternoon.

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

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

Prosecutors allege that Bankman-Fried became involved in multiple fraudulent schemes. Among them, they allege that Bankman-Fried stole money from FTX clients to support Alameda, made investments in other companies, bought luxury real estate and donated tens of millions of dollars to political campaigns.

In letters dated Sunday, December 18, and signed the following 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 commit wire fraud. She is charged with the same crimes as Bankman-Fried, except for the 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, once again, neither is today’s.”

Federal regulators also accused Ellison and Wang of playing leading roles in a multi-year 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, regulators alleged. The SEC said this manipulation was carried out by buying large amounts of FTT on the open market to prop up its price.

Regulators say this alleged manipulation inflated Alameda’s holdings, overstated 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 left investors with the stock,” SEC Chairman Gary Gensler said. said in a statement.

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

“Ellison and Wang were active participants in the scheme to deceive FTX investors and engaged in conduct that was critical to its success,” the SEC said. said in a statement.

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