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



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

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

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

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

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

Sam Bankman-Fried was on his way to the United States from the Bahamas, where he was arrested last week on an eight-count indictment of what Williams called one of the biggest financial frauds in US history. Bankman-Fried waived her right to oppose extradition on Wednesday and boarded a plane to the United States that evening.

Bankman-Fried is expected to appear before a judge in Manhattan on Thursday. Prosecutors and their lawyers are discussing a bail package that would allow them to avoid detention, people familiar with the matter told CNN.

Wang co-founded FTX with Bankman-Fried in 2019 and also worked with them at their hedge fund Alameda Research. According to court filings, Ellison will become CEO of Alameda in October 2021.

Prosecutors accused Bankman-Fried of engaging in several fraud schemes. Among them, they allege that Bankman-Fried stole money from FTX clients, invested in other companies, bought luxury real estate and donated hundreds of millions of dollars to political campaigns to support Alameda.

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

Ellison pleaded guilty to seven counts including conspiracy to commit wire fraud, conspiracy to commit money laundering, conspiracy to commit securities fraud, conspiracy to commit commodities fraud and conspiracy to commit wire fraud. He has been charged with the same crimes as Bankman-Fried, except on the campaign finance charges.

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

“As I said last week, this investigation is very ongoing and it is moving very quickly,” Williams said. “I also said that last week’s announcement will not be our last and let me make it clear once again, neither will today’s.”

Federal regulators also accused Ellison and Wang of playing a key role 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,” regulators allege. The SEC said this manipulation was done by purchasing large quantities of FTT in the open market to inflate its price.

Regulators say this alleged manipulation inflated Almeida’s holdings, inflated 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 holding the bag,” SEC Chairman Gary Gensler said in a statement.

According to the SEC, Wang created FTX’s source code, which allowed Almeida to divert FTX customer funds, and Ellison to use the misappropriated funds for the hedge fund’s trading activity.

“Allison and Wang were active participants in FTX’s scheme to defraud investors and engaged in conduct that was critical to its success,” the SEC said in a release.

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