The ex-girlfriend of disgraced crypto mogul Sam Bankman-Fried and a co-founder of FTX pleaded guilty to fraud charges in the collapse of the cryptocurrency exchange and are both cooperating with federal prosecutors, officials announced Wednesday night.
Caroline Ellison, the former CEO of Bankman-Fried’s crypto hedge fund company Alameda Research, and Gary Wang, a co-founder of FTX, pleaded guilty to the criminal offenses before Bankman-Fried landed in New York to face his own charges, Manhattan US Attorney Damian Williams said in a statement.
The charges filed against the pair were “in connection with their roles in the frauds that contributed to FTX’s collapse,” Williams said.
“Both Ms. Ellison and Mr. Wang have plead guilty to those charges and they are both cooperating with the Southern District of New York.”
News of the charges came after Bahamian authorities handed Bankman-Fried over to FBI custody. He was flown back to New York Wednesday night and will appear in front of a federal judge “as soon as possible,” the US attorney said.
Prosecutors allege that Bankman-Fried, the former CEO of FTX, hid the currency exchange’s financial problems from the public and defrauded investors out of over $1.8 billion.
The Securities and Exchange Commission accused Bankman-Fried of illegally using investors’ money to fund Alameda and buy real estate on behalf of himself and his family. He’s also charged with wire fraud, money laundering, and campaign finance charges.
Williams has described the FTX collapse as one of the “biggest financial frauds in American history.” The company had an estimated worth at one point of $32 billion.
He said his office’s investigation is ongoing but “moving quickly” and called on former employees of Bankman-Fried’s crypto empire to come forward before federal authorities come for them.
“Let me reiterate a call I made last week — 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,” Williams said sternly.
Ellison pleaded guilty to seven charges of defrauding customers and investors of both FTX and Alameda, according to the agreement. The charges carry a maximum penalty of up to 110 years.
As part of the plea deal, she was released on a $250,000 bond and is barred from leaving the US. According to court documents, she is also to make restitution in an amount to be determined by the court.
Wang, meanwhile, pleaded guilty to four charges including wire fraud, conspiracy to commit wire fraud, and conspiracy to commit commodities and securities fraud. The maximum sentence for the charges is 50 years in imprisonment.
“We continue to work around the clock and we are far from done,” Williams said about his office’s investigation.
Ellison and Wang are not the first FTX employees to flip on Bankman-Fried. Ryan Salame, a top FTX executive, told securities regulators in the Bahamas on Nov. 9 that assets belonging to FTX customers were transferred to Alameda to cover the hedge fund’s losses, according to a document released during FTX’s bankruptcy proceedings in Delaware.
Bankman-Fried, Ellison, and Wang were reportedly members of an FTX inner-circle group chat aptly called “Wire Fraud.” In his final tweet before his arrest in the Bahamas, Bankman-Fried admitted that he couldn’t rule out that such a group chat existed — just that he wasn’t involved.
Bankman-Fried stepped down as CEO of FTX on Nov. 11 — the day the company filed for bankruptcy.
Ellison, 28, was believed by legal experts to be working with federal investigators to turn on her ex-boyfriend. She was reportedly spotted in New York City last week.
