Caroline Ellison, the former CEO of Alameda Research, and Gary Wang, the co-founder of FTX, have admitted guilt on federal counts of fraud and are helping the Justice Department investigate Sam Bankman-Fried, the former CEO of FTX.
On December 22, United States Attorney for the Southern District of New York (SDNY) Damian Williams made the announcement, stating that it is unlikely that this is the last significant development.
"As I mentioned the week before, this investigation is still active and progressing swiftly. "I also stated that last week's announcement would not be our last one, and let me be crystal clear that today's statement is not either.
I’m announcing that SDNY has filed charges against Caroline Ellison and Gary Wang in connection with their roles in the frauds that contributed to FTX's collapse. Both Ms. Ellison and Mr. Wang have plead guilty to those charges and both are cooperating with the SDNY.” he added.
Williams also issued a strong warning to anyone who may have engaged in misconduct at FTX or Alameda in the statement:
"Now is the time to get ahead of it." "We are moving quickly, and our patience is not eternal.”
However, considering that Ellison was allegedly seen on Dec. 5 at a coffee shop not far from the offices of the U.S. Attorney and the New York FBI, some people may not be surprised by her subsequent guilty plea and cooperation with the SDNY.
Gary of FTX and Ellison of Alameda face additional fraud accusations
Caroline Ellison, the former CEO of Alameda Research, as well as Gary Wang, the former co-founder of FTX, have been charged with new fraud by the United States Securities and Exchange Commission (SEC) and Commodities Futures Trading Commission (CFTC).
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The U.S. Department of Justice (DOJ) previously brought federal fraud charges against the two individuals on December 22, and those allegations have already been resolved with the pair pleading guilty. Hence, the SEC and CFTC have now filed new charges following that action.
Ellison and Wang, according to the SEC, were charged over their involvement in the "multiyear plan to deceive equity investors in FTX," and the SEC is also looking into whether additional securities laws were broken.
The price-stabilizing manipulation
The price of FTX Token (FTT), which is referred to as a crypto security token in the filing, was allegedly manipulated by Ellison, working under the instructions of former FTX CEO Sam Bankman-Fried, to further the plan.
The aforementioned manipulation, which occurred between 2019 and 2022, was carried out by "buying huge quantities on the open market to push up its price." Concerning the CFTC's accusations, changes were made to its fraud petition from December 13 that identified Ellison and Wang as named defendants in addition to Samuel Bankman-Fried, FTX Trading, and Alameda Research.
In the revised complaint, Ellison is now accused of
"fraud and substantial misrepresentations in connection with the sale of digital asset commodities in interstate commerce."
With regard to Wang, the former FTX executive is charged with
"fraud in connection with the selling of digital asset commodities in interstate commerce."
Regarding the actions that gave rise to the accusations, the SEC and CFTC both assert that Wang wrote the software code for FTX that allowed Alameda to redirect customer monies from FTX, which enabled Ellison to siphon off those funds for Alameda's trading activity.
SBF Extradited
Sam Bankman-Fried, the former CEO of FTX, is also said to have arrived in the United States after being extradited from the Bahamas on the basis of cryptocurrency fraud allegations brought by the American government. The Southern District of New York's US Attorney, Damian Williams, has signed the eight-count indictment against SBF.
The Justice Department, the SEC, and the CFTC have all filed complaints against SBF for misleading lenders and investors. The ex-crypto billionaire was detained by Royal Bahamas police on December 12, and his initial bail request was rejected by a Bahamian court.
