Associates of FTX founder plead guilty to criminal charges

NEW YORK

Two of Sam Bankman-Fried’s top associates secretly pleaded guilty to criminal charges in the collapse of the cryptocurrency exchange FTX and are cooperating with investigators, a federal prosecutor announced on Dec. 21 as the digital coin entrepreneur was flown in FBI custody to the U.S. from the Bahamas.

Carolyn Ellison, the 28-year-old former CEO of Alameda Research, a trading firm started by Bankman-Fried, and Gary Wang, the 29-year-old who co-founded FTX, pleaded guilty to charges including wire fraud, securities fraud and commodities fraud.

“They are both cooperating with the Southern District of New York,” U.S. Attorney Damian Williams said Dec. 21 night in a video statement released on social media.

He added that anyone else who participated in the fraud should reach out to his office because “our patience is not eternal” and further criminal charges against others were possible.

The surprise guilty pleas were announced as Bankman-Fried was extradited from the Bahamas by U.S. law enforcement to answer to charges tied to his role in FTX’s failure. He was expected to appear in a federal court in New York City yesterday.

Before Bankman-Fried was in the air, U.S. prosecutors hadn’t publicly revealed that Ellison and Wang were facing potential criminal charges or that they had pledged to work with investigators.

It was unclear whether Bankman-Fried, who has apologized for FTX’s collapse but denied defrauding anyone, was also in the dark.

Ellison and Wang signed plea agreements on Dec. 19, partially in exchange for a promise that prosecutors would recommend a reduction in their sentences if they cooperate fully in the investigation.

Without such a deal, Ellison, who also faces a money laundering conspiracy charge, could face up to 110 years in prison. Wang could get up to 50 years.

Both were released on $250,000 bail after their secret court appearances with travel restricted to the continental United States.

“Gary has accepted responsibility for his actions and takes seriously his obligations as a cooperating witness,” said Wang’s lawyer, Ilan Graff.

Bahamian authorities arrested Bankman-Fried last week at the request of the U.S. government. U.S. prosecutors allege he played a central role in the rapid collapse of FTX and hid its problems from the public and investors.

The SEC and prosecutors said Bankman-Fried illegally siphoned off customer deposits on the FTX platform and used it to enable Alameda’s trading, buy real estate and make huge campaign donations to U.S. politicians.

The 30-year-old could potentially spend the rest of his life in jail.