Two Key FTX Executives Plead Guilty to Fraud Charges, as SBF Lands Back in the U.S.
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Two Key FTX Executives Plead Guilty to Fraud Charges, as SBF Lands Back in the U.S.

It's been suggested that SBF wanted to avoid a prolonged stay at Fox Hill, the only prison in The Bahamas, where conditions are dire.

Two Key FTX Executives Plead Guilty to Fraud Charges, as SBF Lands Back in the U.S.

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Two of Sam Bankman-Fried's closest business associates have pleaded guilty to federal fraud charges — and are now cooperating with the Department of Justice's investigation.

Caroline Ellison is the former CEO of Alameda Research, FTX's sister trading firm, which has been accused of misusing billions of dollars in customer funds.

And Gary Wang is the co-founder of the now-bankrupt exchange, with U.S. officials warning that further announcements are likely as the fast-moving investigation continues.

Ellison has pleaded guilty to two counts of wire fraud — as well as five counts of conspiracy to commit wire fraud, securities fraud and commodities fraud. The total maximum sentence she could face for these charges is 110 years in prison.

Wang has pleaded guilty to one count of wire fraud and three counts of conspiracy to commit wire fraud, securities fraud and commodities fraud — all of which could carry a total maximum sentence of 50 years.

Both have signed a document pledging to "truthfully and completely disclose all information concerning all matters" to the U.S. attorney, the FBI and agencies.

All of this comes after it was confirmed that Sam Bankman-Fried had agreed to be extradited to the U.S. to face charges, with the one-time billionaire now in FBI custody.

He was taken directly to New York, with prosecutors confirming that he'll appear in court as soon as possible.

It's been suggested that SBF wanted to avoid a prolonged stay at Fox Hill, the only prison in The Bahamas, where conditions are dire.

SEC Charges

In other developments, the U.S. Securities and Exchange Commission has charged Ellison and Wang for "their roles in a multiyear scheme to defraud equity investors in FTX."

It's alleged that Ellison, under SBF's direction, manipulated the price of FTT — FTX's native token — "by purchasing large quantities on the open market to prop up its price."

In a statement, the SEC added:

"By manipulating the price of FTT, Bankman-Fried and Ellison caused the valuation of Alameda's FTT holdings to be inflated, which in turn caused the value of collateral on Alameda's balance sheet to be overstated, and misled investors about FTX's risk exposure."

The SEC goes on to allege that Wang was responsible for creating the software code that allowed funds belonging to FTX customers to be diverted to Alameda — with Ellison then using these funds to trade. Gary Gensler added:

"As part of their deception, we allege that Caroline Ellison and Sam Bankman-Fried schemed to manipulate the price of FTT, an exchange crypto security token that was integral to FTX, to prop up the value of their house of cards."

This is a significant development in the investigation into FTX's collapse, not least because Bankman-Fried, Ellison and Wang all lived together in the same Bahamian penthouse where there were allegations of polyamory and drug taking.

Wang's lawyer, Ilan Graff, has said his client "has accepted responsibility for his actions and takes seriously his obligations as a cooperating witness."

Ellison and Bankman-Fried were also in a relationship at times.

U.S. Attorney Damian Williams is urging others who worked at FTX to make the first move and contact prosecutors, warning their patience won't last for long.

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