FTX co-founder Gary Wang and former Alameda Research chief executive officer (CEO) Caroline Ellison have each pleaded guilty to federal charges of fraud and are now cooperating with prosecutors.
News that Wang and Ellison are working with federal prosecutors in the U.S. came on the same day that former FTX co-founder and CEO Sam Bankman-Fried was being moved to a prison in New York from the Bahamas, where he faces eight criminal charges related to the bankruptcy in November of the FTX cryptocurrency exchange.
Bankman-Fried was arrested in the Bahamas earlier in December following his indictment in New York. He agreed to be extradited to the U.S. on December 20.
The U.S. Securities and Exchange Commission (SEC) alleges that Wang, Ellison and Bankman-Fried were involved “in a multiyear scheme to defraud equity investors in FTX.”
Specifically, the SEC alleges that both Ellison and Wang abetted Bankman-Fried in defrauding FTX customers.
The SEC claims that Wang created a software backdoor in FTX’s platform that allowed Alameda Research to divert customer funds for its own trades.
Alameda was led by Bankman-Fried until 2021, when Ellison assumed control of the sister company to FTX. Ellison was also reportedly in a romantic relationship with Bankman-Fried.
The SEC says that both Ellison and Wang have agreed to cooperate with the agency’s ongoing investigation and prosecution of Bankman-Fried.
A lawyer for Wang said in a written statement, “Gary has accepted responsibility for his actions and takes seriously his obligations as a cooperating witness.”
