The co-founder of FTX, Gary Wang, has pleaded guilty to federal charges. In addition, former Alameda Research co-CEO Caroline Ellison has pleaded guilty, according to the U.S. attorney Damian Williams.
Wang has pleaded guilty on conspiracy to commit wire fraud, wire fraud, and conspiracy to commit securities fraud. As far as Ellison, she pleaded guilty to two counts of wire fraud, two counts of conspiracy to commit wire fraud, conspiracy to commit commodities fraud, conspiracy to commit securities fraud and conspiracy to commit money laundering.
According to CNBC, these charges were released the same exact night that the former FTX CEO Sam Bankman-Fried was traveling from the Bahamas to New York. The former CEO faces eight federal criminal charges from the prosecutors who sentenced others in this case. Bankma-Fried was to return to the U.S. on Monday and appear to a court hearing.
“As I said last week, this investigation is very much ongoing,” Williams said in a prerecorded message on social media.
“I also said that last’s week announcement would not be our last. And let me be clear, once again, neither is today’s,” the U.S. attorney continued.
Bankman-Fried was arrested last week in the Bahamas following the indictment from prosecutors in the Southern District of New York. Over the past week, he has been in court hearings on whether he would accept extradition to the U.S.
In November of 2022, Reuters reported that Bankman-Fried moved $10 billion in customers funds from FTX to Alameda Research. An estimated $1 billion to $2 billion dollars went missing in the process.
“We didn’t secretly transfer,” he told Reuters in text messages at the time. “We had confusing internal labeling and misread it.”
Statement of U.S. Attorney Damian Williams on U.S. v. Samuel Bankman-Fried, Caroline Ellison, and Gary Wang pic.twitter.com/u1y4cs3Koz
— US Attorney SDNY (@SDNYnews) December 22, 2022
The SEC alleged that they were involved “in a multiyear scheme to defraud equity investors in FTX, the crypto trading platform co-founded by Samuel Bankman-Fried and Wang.”
Alameda Research was also linked to many loans from major crypto companies that have also filed for Bankruptcy. These firms include Voyager Digital and BlockFi Lending.
Williams has not given other details when it comes to any of the charges against Ellison or Wang in this case.
The SEC is claiming that Wang created a software backdoor in the FTX platform. This is how Alameda research diverted customer funds for its own internal trading. Alameda research was also lead by Bankman-Fried until 2021 when Ellison took control alongside Sam Trabucco who who departed from the company in 2022.
“Bankman-Fried and Wang thus gave Alameda and Ellison carte blanche to use FTX customer assets for Alameda’s trading operations and for whatever other purposes Bankman-Fried and Ellison saw fit,” the SEC said. Trabucco, who joined Alameda “in or around 2019,” according to the SEC.
Wang’s attorney said in a statement, “Gary has accepted responsibility for his actions and takes seriously his obligations as a cooperating witness.”
Ellison and Wang are the second and third to be charged in connection with the FTX multibillion-dollar collapse.