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Two Bankman-Fried colleagues plead guilty to fraud

Caroline Ellison and Gary Wang helped the disgraced crypto mogul divert funds and are now aiding prosecutors

Manhattan U.S. Attorney Damian Williams said Dec. 21 that Caroline Ellison and Gary Wang, associates of Sam Bankman-Fried, pleaded guilty to fraud charges. (Video: The Washington Post)
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Two former colleagues of disgraced cryptocurrency mogul Sam Bankman-Fried pleaded guilty to federal criminal charges that they helped him orchestrate a years-long scheme to defraud investors in FTX, the crypto trading platform that collapsed last month, the U.S. attorney for the Southern District of New York said Wednesday.

The executives — Caroline Ellison, who served as chief executive of Alameda Research, a hedge fund owned by Bankman-Fried, and Gary Wang, FTX’s former chief technology officer — are cooperating with prosecutors, said Manhattan U.S. Attorney Damian Williams.

The news came as Bankman-Fried was being transferred to New York from the Bahamas, where he had been held in prison for over a week. The guilty pleas by Ellison and Wang signaled swiftly mounting legal peril for Bankman-Fried, as prosecutors assemble an arsenal of evidence against him.

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“We continue to work around-the-clock and we are far from done,” Williams said in a prerecorded video announcement Wednesday evening. He encouraged others who participated in misconduct in Bankman-Fried’s crypto empire to come forward, repeating a call he issued when he announced charges against the former executive last week. A spokesman for Bankman-Fried declined to comment.

Ellison, who in addition to running Bankman-Fried’s crypto trading firm was also his ex-girlfriend, pleaded guilty to seven counts that mirror a significant portion of Bankman-Fried’s indictment. Her charges include conspiracies to commit wire fraud, securities fraud and commodities fraud, and money laundering. She faces up to 110 years in prison.

Wang, co-founder of FTX, pleaded guilty to four conspiracy and fraud-related counts. He faces up to 50 years in prison.

“They are both cooperating with the Southern District of New York,” Williams said.

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What charges is Sam Bankman-Fried facing?
  • Federal prosecutors in the Southern District of New York unsealed an eight-count indictment against Bankman-Fried, alleging fraud and conspiracy.
  • The Commodity Futures Trading Commission filed fraud charges against him, seeking restitution for investors and customers in civil court.
  • The Securities and Exchange Commission lobbed its own civil charges at Bankman-Fried for allegedly “orchestrating a scheme to defraud equity investors.”
‘Plain old embezzlement’
  • Sam Bankman-Fried dropped his objection to extradition from the Bahamas and is expected to face charges in a federal court in Manhattan.
  • FTX customers will not fully recover their money, the company’s new CEO, John J. Ray III, told the House Financial Services Committee.
  • Ray sees the alleged crimes of the crypto company’s collapse as simple, despite the seemingly complex nature of the circumstances. “This isn’t sophisticated whatsoever. This is just plain old embezzlement,” he said.
What does this mean for the crypto industry?
  • Bankman-Fried gave about $40 million in political donations this cycle. See who benefited.
  • The collapse has focused new scrutiny on the lack of oversight and regulation in an industry that has operated outside conventional banking rules.


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Ilan Graff, a lawyer for Wang, said his client “has accepted responsibility for his actions and takes seriously his obligations as a cooperating witness.” An attorney for Ellison did not immediately respond to a request for comment.

Ellison and Wang, who were each released on a $250,000 bond, inked their plea agreements and formally entered guilty pleas in front of a federal judge in Manhattan at a sealed proceeding Monday. If they are considered helpful to the case and do not violate the agreements, prosecutors are expected to recommend a lighter sentence, although no sentence can be promised.

In a parallel move, the Securities and Exchange Commission on Wednesday also charged Ellison and Wang with fraud, alleging they helped Bankman-Fried divert FTX customer funds to the hedge fund while misleading investors about it. The agency also alleges Ellison, acting at Bankman-Fried’s direction, manipulated the price of FTT, a digital token issued by FTX that the executives used to mislead investors about the health of their businesses.

“When FTT and the rest of the house of cards collapsed, Mr. Bankman-Fried, Ms. Ellison, and Mr. Wang left investors holding the bag,” SEC Chair Gary Gensler said in a statement.

FTX crypto implosion focuses scrutiny on SEC chief Gary Gensler

Bankman-Fried is accused of orchestrating one of the biggest financial frauds in American history. Federal authorities allege that dating back to FTX’s launch in 2019, the company was siphoning off customer deposits it promised to safeguard and using them instead as a personal piggy bank for its top executives, who used the funds to buy hundreds of millions of dollars of real estate, make risky investments and donate enormous sums of political cash.

John J. Ray III, brought in to replace Bankman-Fried as FTX’s chief executive and manage its liquidation, said he has never seen “such an utter failure of corporate controls at every level of an organization.” In testimony before the House Financial Services Committee last week, he blamed the company’s collapse on the “absolute concentration of control in the hands of a very small group of grossly inexperienced and unsophisticated individuals.”

Jacobs reported from New York.