Two former associates of Sam Bankman-Fried (SBF), the former CEO of FTX, have pleaded guilty to criminal fraud charges tied to FTX’s collapse. The associates are the former Alameda Research CEO, Caroline Ellison, and FTX co-founder, Gary Wang.
SBF’s former associates pleaded guilty to federal charges and securities violations and were released on a US$ 250,000 bond. They both signed plea deals on December 19, 2022, in exchange for reduced sentences from the presiding judge if they fully cooperate with prosecutors in the ongoing investigations into the collapse of FTX.
A December 21, 2022 press release from the Securities and Exchange Commission (SEC) stated that it had charged Caroline Ellison and Gary Wang with defrauding Investors in Crypto Asset Trading Platform FTX.
“As part of their deception, we allege that Caroline Ellison and Sam Bankman-Fried schemed to manipulate the price of FTT, an exchange crypto security token that was integral to FTX, to prop up the value of their house of cards,” said SEC Chair Gary Gensler.
In a related event, the Commodity Futures Trading Commission (CFTC), charged the two associates of SBF with fraud. According to the CFTC press release, also dated December 21, 2022, the two were charged with engaging in a fraudulent scheme. Wang was charged with fraud in connection with the sale of digital asset commodities in interstate commerce. Ellison was charged with fraud and material misrepresentations in connection with the sale of digital asset commodities in interstate commerce.
“With today’s charges we continue to move aggressively to hold all individuals who commit fraud accountable and protect customers from additional harm and losses. In the absence of a comprehensive regulatory framework over digital assets, the CFTC will use all of its existing power and authority to protect all market participants, while ensuring the integrity of commodity markets,” said CFTC Chairman Rostin Behnam.
According to a US Department of Justice press release dated December 13, 2022, SBF was indicted for Fraud, Money Laundering, and Campaign Finance Offenses:
“The Justice Department has filed charges alleging that Samuel Bankman-Fried perpetrated a range of offenses in a global scheme to deceive and defraud customers and lenders of FTX and Alameda, the defendant’s crypto hedge fund, as well as a conspiracy to defraud the United States government,” said Attorney General Merrick B. Garland.
Meanwhile, on December 22, 2022, a federal judge in New York released SBF on bail set at US$ 250 million. SBF was ordered to stay at his parent’s home in California, awaiting his trial.
The plea agreement by SBF’s two former associates and the pending trial of SBF are likely to throw further insights into the financial dealings of FTX.
