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22 Dec, 2022 16:13

FTX execs plead guilty to fraud charges

The collapsed crypto exchange’s co-founder Gary Wang and former Alameda Research CEO Caroline Ellison are reportedly cooperating with investigators
FTX execs plead guilty to fraud charges

Two associates of former FTX chief executive Sam Bankman-Fried have pleaded guilty to criminal charges related to the collapse of the cryptocurrency exchange, US Attorney Damian Williams revealed on Wednesday.

He said that former FTX chief technology officer Gary Wang and former Alameda Research CEO Caroline Ellison were cooperating with the Justice Department's investigation.

Ellison (28) ran the crypto hedge fund Alameda Research, which was a subsidiary of FTX. She had previously worked with Bankman-Fried at Jane Street and was reportedly his girlfriend at times.

According to her plea agreement, which was cited by Business Insider, Ellison faces seven charges that collectively carry a maximum prison sentence of 110 years. Those include conspiracy to commit wire fraud, securities fraud, and commodities fraud. She also faces a charge of conspiracy to commit money laundering.

Meanwhile, Wang (29) was Bankman-Fried’s college roommate at the Massachusetts Institute of Technology, with whom he later cofounded FTX in 2019. Wang pleaded guilty to conspiracy to commit wire fraud, commodities fraud, and securities fraud.

The charges were released the same Wednesday night that Bankman-Fried was extradited from the Bahamas and landed back in New York, where he faces eight federal criminal charges from the same prosecutors who accepted plea deals from Ellison and Wang.

Bankman-Fried is suspected of defrauding investors out of nearly $2 billion. According to the US Securities and Exchange Commission (SEC), the fallen crypto billionaire concealed both risks and FTX’s relationship with its trading firm, Alameda Research, and used commingled customer funds.

He also diverted billions of dollars of customer funds to help grow his other entities. Alameda Research was reportedly allowed to carry a negative balance on FTX and was exempt from the exchange’s risk protocols.

According to the SEC complaint, Bankman-Fried personally directed that FTX’s “risk engine” not apply to Alameda and hid the extent of the ties between the two companies from investors.

The SEC also charges that, as late as last month, Bankman-Fried was continuing to mislead investors while trying to fill a multi-billion-dollar hole in FTX’s balance sheet. It only stopped when FTX and Alameda filed for bankruptcy protection on November 11, the regulator said.

For more stories on economy & finance visit RT's business section

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