Former Alameda Research CEO Caroline Ellison and FTX co-founder Gary Wang have pleaded guilty to criminal charges.
It was confirmed this Thursday, December 22, by the federal prosecutor for the Southern District of New York, United States, Damian Williams.
Ellison and Wang, in addition, also face civil charges denounced by the Securities and Exchange Commission of that country, publishes The Wall Street Journal.
Williams added that both Ellison and Wang are cooperating with prosecutors and that he plans to bring more charges against others.
He also urged others involved in the collapsed crypto company to come forward to justice before they are charged. “Our patience is not eternal,” he said, adding: “We are still working around the clock and we are far from over.”
Former FTX CEO, co-founder and public figure Sam Bankman-Fried is also in FBI custody, the prosecutor said.
FTX: Bankman-Fried is already in the hands of the FBI
The Securities and Exchange Commission and the Commodity Futures Trading Commission also filed civil charges against the two, alleging they defrauded investors.
Ellison and Wang are cooperating with those investigations as well, and both agencies noted that Ellison and Wang reached an agreement.
If the settlement is approved by a judge, both will give up the money they got from FTX and Alameda and will be prohibited from “issuing, buying, offering or selling any security” except for their own personal investment accounts.
“In their strategy to deceive, Caroline Ellison and Sam Bankman Fried were manipulating the value of FTT, the tokens that were part of FTX, to support the ‘houses of cards’ they were making,” the SEC said.
The complaint alleges that Ellison and Wang played key roles in a series of schemes to misuse the investments of those who trusted FTX to support the other SBF-owned company, Alameda.
“Until cryptocurrency platforms abide by the laws that regulate the exchange of securities, the risk for investors will persist. It is important for the SEC to use every single tool we have to bring the crypto industry into compliance with these laws,” the SEC said.
FTX is in the midst of bankruptcy, and most likely, scammed investors will have to wait months or even years before they can get their funds back. If this happens, it will probably be a partial return.
What is Sam Bankman-Fried accused of?
Bankman-Fried is accused of “defrauding investors” for having diverted “FTX client funds to Alameda Research crypto firm while raising more than $1.8 million from investors.”
The SEC complaint says that Bankman Fried presented FTX as “a safe and responsible crypto asset trading platform”, but in reality, its founder, described as the “white knight of cryptocurrencies”, was a party involved in a “ fraud that went on for years” designed to hide from FTX investors the fact that their funds were being diverted to the Alameda hedge fund, owned by Bankman-Fried himself.
Now read:
A well-hidden secret allowed FTX to defraud its customers
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