FTX And Alameda Research Execs Plead Guilty to Fraud Charges

Former Alameda Research CEO Caroline Ellison and FTX co-founder Gary Wang pleaded guilty to charges tied to FTX’s collapse, U.S. Attorney Damian Williams announced Wednesday night.

Both the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) announced charges against the two, alleging that Ellison had been ordered by exchange creator Sam Bankman-Fried to manipulate the price of FTT, an exchange token created by FTX.

Williams stated that the two are helping the investigators. They were not charged with anything specifically, according to the U.S. Attorney for the Southern District of New York (SDNY). There were no court records accessible right away.

Sam Bankman-Fried, the founder of FTX, was detained in Nassau earlier this month and then charged by the SDNY with eight felonies. Charges include campaign financing crimes, wire fraud, money laundering, and securities fraud. He is being returned to the United States and will show up in court as soon as possible.

Sanjay Wadhwa, the deputy director of enforcement at the Securities and Exchange Commission, said in a statement that the three were active participants in a scheme to conceal material information from FTX investors, including through the efforts of Mr. Bankman-Fried and Ms. Ellison to artificially prop up the value of FTT, which served as collateral for undisclosed loans that Alameda took out from FTX pursuant to its undisclosed, and virtually unlimited, line of credit.

Caroline Allison Plea Agreement

According to a recently revealed plea agreement with the U.S. Attorney’s Office of the Southern District of New York, former Alameda Research CEO Caroline Ellison will not be permitted to leave the continental United States and must forfeit any earnings from the commission of the offenses she is accused of.

She will also need to pay restitution of an amount determined by the court. The New York journal Inner City Press, which covers court cases in the city’s U.S. court, was the first to receive the plea deal.

The agreement states that if Ellison fully cooperates with the SDNY’s investigation, as well as any other law enforcement agency designated by the office, she won’t be further prosecuted criminally except for possible criminal tax violations with regard to the wire and commodity fraud charges that resulted from commingling funds between FTX and Alameda accounts. The deal does not guarantee that other agencies will not pursue prosecution at a later date.