AP

Associates of FTX founder plead guilty to criminal charges

Dec 20, 2022, 6:10 PM | Updated: Dec 22, 2022, 2:26 am

FTX founder Sam Bankman-Fried, center, is escorted from the Magistrate Court in Nassau, Bahamas, We...

FTX founder Sam Bankman-Fried, center, is escorted from the Magistrate Court in Nassau, Bahamas, Wednesday, Dec. 21, 2022, after agreeing to be extradited to the U.S.(AP Photo/Rebecca Blackwell)

(AP Photo/Rebecca Blackwell)

NEW YORK (AP) — Two of Sam Bankman-Fried’s top associates secretly pleaded guilty to criminal charges in the collapse of the cryptocurrency exchange FTX and are cooperating with investigators, a federal prosecutor announced Wednesday as the digital coin entrepreneur was being flown in FBI custody to the U.S. from the Bahamas.

Carolyn Ellison, the 28-year-old former CEO of Alameda Research, a trading firm started by Bankman-Fried, and Gary Wang, the 29-year-old who co-founded FTX, pleaded guilty to charges including wire fraud, securities fraud and commodities fraud.

“They are both cooperating with the Southern District of New York,” U.S. Attorney Damian Williams said Wednesday night in a video statement released on social media.

He added that anyone else who participated in the fraud should reach out to his office because “our patience is not eternal” and further criminal charges against others were possible.

The surprise guilty pleas were announced as Bankman-Fried was being extradited from the Bahamas by U.S. law enforcement to answer to charges tied to his role in FTX’s failure. He was expected to appear in a federal court in New York City on Thursday.

Before Bankman-Fried was in the air, U.S. prosecutors hadn’t publicly revealed that Ellison and Wang were facing potential criminal charges or that they had pledged to work with investigators.

It was unclear whether Bankman-Fried, who has apologized for FTX’s collapse but denied defrauding anyone, was also in the dark.

Ellison and Wang signed plea agreements on Dec. 19, partially in exchange for a promise that prosecutors would recommend a reduction in their sentences if they cooperate fully in the investigation.

Without such a deal, Ellison, who also faces a money laundering conspiracy charge, could face up to 110 years in prison. Wang could get up to 50 years.

Both were released on $250,000 bail after their secret court appearances with travel restricted to the continental United States.

“Gary has accepted responsibility for his actions and takes seriously his obligations as a cooperating witness,” said Wang’s lawyer, Ilan Graff.

A lawyer for Ellison did not immediately return messages seeking comment.

In a parallel civil complaint filed Wednesday, the Securities and Exchange Commission said Wang and Ellison were “active participants” in what it said was Bankman-Fried’s scheme to defraud FTX investors and swindle its customers.

Wang created the software code that allowed Alameda to divert FTX customer funds. Ellison then used the misappropriated funds for Alameda’s trading activity, the SEC said.

Bahamian authorities arrested Bankman-Fried last week at the request of the U.S. government. U.S. prosecutors allege he played a central role in the rapid collapse of FTX and hid its problems from the public and investors.

The SEC and prosecutors said Bankman-Fried illegally siphoned off customer deposits on the FTX platform and used it to enable Alameda’s trading, buy real estate and make huge campaign donations to U.S. politicians.

The 30-year-old could potentially spend the rest of his life in jail.

Bankman-Fried was initially denied bail by a Bahamian judge. The founder and former CEO of FTX, once worth tens of billions of dollars on paper, was then held in the Bahamas’ Fox Hill prison, which has been cited by human rights activists as having poor sanitation and as being infested with rats and insects.

On Wednesday, Bahamian Attorney General Ryan Pinder said Bankman-Fried had agreed to be transferred to the U.S.

Reporters witnessed Bankman-Fried leaving a Magistrate Court in Nassau in a dark SUV earlier Wednesday after waiving his right to challenge the extradition.

At his initial appearance in a U.S. courtroom, Bankman-Fried’s attorney will be able to request that he be released on bail.

Bankman-Fried was one of the world’s wealthiest people on paper, with an estimated net worth of $32 billion. He was a prominent personality in Washington, donating millions of dollars toward mostly left-leaning political causes and Democratic political campaigns. FTX grew to become the second-largest cryptocurrency exchange in the world.

He has said that he did not “knowingly” misuse customers’ funds, and said he believes his millions of angry customers will eventually be made whole.

At a congressional hearing last week, the new FTX CEO John Ray III, who is tasked with taking the company through bankruptcy, bluntly disputed those assertions: “We will never get all these assets back,” Ray said.

___

Sweet reported from Charlotte, North Carolina. Associated Press writer Deepti Hajela contributed in New York.

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

AP

jerry west...

Tim Reynolds, The Associated Press

Jerry West, a 3-time Hall of Fame selection and the NBA logo, dies at 86

Jerry West, a three-time Basketball Hall of Fame inductee whose silhouette is considered to be the basis of the NBA logo, died Wednesday morning.

7 hours ago

Photo: Construction vehicles are parked outside of the Station U & O building on Tuesday, June 11, ...

Haleluya Hadero, The Associated Press

Amazon adds $1.4B to affordable housing fund for regions where it has corporate offices

Amazon is adding $1.4B to a fund for building more affordable housing in regions where the company has major corporate offices.

21 hours ago

hunter biden...

Randall Chase and the Associated Press

Hunter Biden convicted of all 3 felony charges in federal gun trial

Hunter Biden has been convicted of all three felony charges related to the purchase of a revolver in 2018, but no sentencing date was set.

1 day ago

Photo: A Bremerton man who made 20 "swatting" calls around the U.S. and in Canada, prompting real e...

Associated Press

Bremerton man sentenced for 20 ‘swatting’ calls of false threats in US, Canada

A Bremerton man who made 20 "swatting" calls around the U.S. and in Canada, prompting real emergency responses, has been sentenced.

2 days ago

Image: U.S. Secretary of Defense Lloyd Austin, left, speaks with Ukraine's President Volodymyr Zele...

Associated Press

Ukraine uses US weapons to strike inside Russia, a Western official tells AP

Ukraine has used U.S weapons to strike inside Russia in recent days, according to a Western official familiar with the matter told the AP.

7 days ago

boeing nasa...

Marcia Dunn, The Associated Press

Boeing launches NASA astronauts for the first time after years of delays

Boeing launched astronauts for the first time Wednesday, belatedly joining SpaceX as a second taxi service for NASA.

7 days ago

Associates of FTX founder plead guilty to criminal charges