US Attorney General Damian Williams made a statement Wednesday night. According to the statement, former Alameda Research CEO Caroline Ellison and FTX co-founder Gary Wang pleaded guilty to charges related to FTX’s collapse. So Ellison and Wang pleaded guilty to federal fraud charges. They are cooperating with the US Department of Justice’s investigation into Sam Bankman-Fried. Here are the details…
FTX co-founder and Alameda CEO pleads guilty
The U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) filed charges against the duo, saying Ellison manipulated the price of FTT, an FTX-issued exchange token, at the behest of exchange founder Sam Bankman-Fried. Williams announced that the duo is collaborating with investigators. The US Attorney for the Southern District of New York (SDNY) did not specify that these individuals were charged.
cryptocoin.com As we reported, FTX founder Sam Bankman-Fried was charged with eight counts by the SDNY earlier this month after he was arrested in Nassau. The charges include money laundering, electronic fraud, securities fraud and campaign finance violations. Williams said in a statement that the FTX founder is in custody by the FBI. He said he would appear in court “as soon as possible”.
The SBF was formally handed over to US authorities from Bahamian custody on December 21, after waiving its right to a formal extradition process that would take weeks. His lawyer claimed that SBF wanted to speed up the process as it is currently trying to “compensate customers”.
What are the details of the complaint?
“Bankman-Fried and Ellison are active participants in a scheme to hide material information from FTX investors, including efforts to artificially support the value of FTT,” Sanjay Wadhwa, SEC Deputy Executive Director, said in a statement. The complaint refers to Bankman-Fried’s public statements. It also states that Alameda is required to submit financial statements that provide evidence that it has not received preferential treatment from FTX. The following statements were included in the complaint:
Given their involvement in the fraud scheme outlined here, Defendants either knew or recklessly said they did not know that these statements to investors were false and misleading and that they were important to FTX’s investors. By surreptitiously transferring FTX’s client funds to Alameda’s ledgers, the defendants hid the real risks FTX investors and clients faced.
Ellison was a close friend of Bankman-Fried. FTX’s token, which Alameda uses as collateral for investments, has been targeted by prosecutors for its role in manipulating FTT. In early December, Ellison, who is thought to be residing in Hong Kong or Nassau, was spotted at a cafe in Manhattan. This led many to suspect that he was working with the authorities. Shortly thereafter, Ellison hired the law firm WilmerHale to represent him. WilmerHale counts Stephanie Avakian, former director of the SEC’s Enforcement Office, as one of her top attorneys.
What had happened?
FTX came under pressure after the CEO of crypto exchange Binance said on November 6 that it plans to sell its remaining FTX FTT token. The SEC lawsuit noted that Ellison tweeted an offer to buy Binance’s entire FTT stake for $22 at the direction of Bankman-Fried. The complaint states that other tweets by Ellison about the integrity of Alameda’s balance sheet were posted at the behest of Bankman-Fried.
The CFTC stated that Ellison was fraudulent and made “false statements” in connection with FTT sales. On the other hand, he claimed that Wang “allows Alameda to maintain an essentially unlimited line of credit on FTX.” Thus, he made similar claims against Wang and Ellison.
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