FTX: Sam Bankman-Fried’s ex Caroline Ellison and co-founder Gary Wang plead guilty to fraud allegations

The ex-girlfriend of disgraced crypto mogul Sam Bankman-Fried and a co-founder of FTX have pleaded guilty to fraud charges in the cryptocurrency exchange collapse and are both cooperating with federal prosecutors.

Caroline Ellison, the former CEO of Mr. Bankman-Fried’s crypto hedge fund firm Alameda Research, and Gary Wang, a co-founder of FTX, pleaded guilty to the crimes before Mr. Bankman-Fried landed in New York to face his own charges put. Manhattan U.S. Attorney Damian Williams said in a statement New email reports.

The charges brought against the couple were “related to their role in the scams that contributed to the collapse of FTX,” Williams said.

“Both Ms. Ellison and Mr. Wang have pleaded guilty to these charges and are both cooperating with the Southern District of New York.”

News of the charges came after Bahamian authorities handed Mr. Bankman-Fried into FBI custody.

He was flown back to New York on Wednesday night and will appear before a federal judge “as soon as possible,” said the US attorney.

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Prosecutors allege Mr. Bankman-Fried, the former CEO of FTX, concealed the exchange’s financial woes from the public and defrauded investors of more than $1.8 billion ($2.6 billion).

The Securities and Exchange Commission charged Mr. Bankman-Fried with illegally using investors’ money to fund Alameda and buy real estate for himself and his family.

He also faces charges of wire fraud, money laundering and campaign finance.

Mr Williams has called the FTX collapse one of the “biggest financial frauds in American history”.

The company was at one point worth an estimated US$32 billion (US$47 billion).

He said his office’s investigation was ongoing but was “moving rapidly” and urged former employees of Mr. Bankman-Fried’s crypto empire to come forward before federal authorities come for them.

“Let me repeat a call I made last week – if you were involved in any wrongdoing at FTX or Alameda, now is the time to preempt it. We’re moving fast and our patience doesn’t last forever,” Mr Williams said sternly.

Ms. Ellison pleaded guilty to seven counts of defrauding clients and investors of FTX and Alameda, pursuant to the agreement.

The charges carry a maximum sentence of up to 110 years.

As part of the plea deal, she was released on $250,000 (US$370,000) bail and is not allowed to leave the United States.

According to court documents, she should also make reparations in an amount to be determined by the court.

Mr. Wang, meanwhile, pleaded guilty to four counts, including wire fraud, conspiracy to commit wire fraud and conspiracy to commit commodity and securities fraud.

The maximum sentence for the accused is 50 years in prison.

“We continue to work around the clock and are far from done,” Williams said of his office’s investigation.

Ms. Ellison and Mr. Wang aren’t the first FTX employees to hit on Mr. Bankman-Fried.

Ryan Salame, a top FTX executive, told Bahamian securities regulators Nov. 9 that assets from FTX clients were transferred to Alameda to cover the hedge fund’s losses, according to a document filed during the bankruptcy proceedings of FTX in Delaware.

Mr Bankman-Fried, Ms Ellison and Mr Wang were reportedly members of an FTX inner circle group chat aptly named “Wire Fraud”.

In his last tweet before his arrest in the Bahamas, Mr Bankman-Fried admitted he couldn’t rule out such a group chat existed – only that he wasn’t involved.

Mr. Bankman-Fried resigned as CEO of FTX on November 11 – the day the company filed for bankruptcy.

Legal experts believe Ms Ellison, 28, is working with federal investigators to frame her ex-boyfriend.

She was reportedly spotted in New York City last week.

This article originally appeared in the NY Post and is reproduced with permission

Originally released as Sam Bankman-Fried’s ex-girlfriend and FTX co-founder plead guilty to cheating allegations

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