Zixiao “Gary” Wang, former FTX technology officer, and Caroline Ellison, who ran the crypto hedge fund of indicted former FTX CEO Sam Bankman-Fried, have pled guilty and are cooperating with the Manhattan U.S. attorney’s office in its case against the disgraced founder, federal authorities said Wednesday night.
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On the same evening that Bankman-Fried was being flown to the United States from Bermuda after waiving extradition, prosecutors announced the guilty pleas and the U.S. Securities and Exchange Commission announced a parallel lawsuit.
Manhattan U.S. Attorney Damian Williams said the government’s investigation is “moving very quickly.” Ellison, the former CEO of Bankman-Fried’s crypto hedge fund Alameda Research, and Wang are “both cooperating with the Southern District of New York,” Williams said.
“We continue to work around the clock, and we are far from done,” Williams claimed.
In his eight-count indictment Bankman-Fried is accused of redirecting billions of dollars from FTX customer deposits to Almeda’s accounts. Williams describe the plot as one of the biggest financial frauds in American history.”
Federal investigators claim Bankman-Fried used the funds to make personal investments, purchase lavish real estate and even repay debts. They also allege he made illegal political donations, a claim they continue to explore.
Once one of the largest cryptocurrency exchanges in the world, and valued at more than $30 billion, FTX filed bankruptcy in November after news of Bankman-Fried’s actions destroyed investor confidence.
In their Wednesday night announcement, the SEC alleged Bankman-Fried’s girlfriend, Ellison, and Wang were all “engaged in conduct that was critical” to the scheme to deceive FTX investors. The Commodity Futures Trading Commission also announced Wednesday that it has filed a complaint against Wang and Ellison.
The agencies said the pair agreed to guilty pleas Monday, settled with the SEC and “acknowledge liability” in the CFTC matter.
Williams hinted Wednesday that more arrests may be on the horizon.
“If you participated in misconduct at FTX or Alameda, now is the time to get ahead of it. We are moving quickly and our patience is not eternal,” he stated.
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Source: https://www.law360.com/articles/1560721
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