Caroline Ellison, the former CEO of Alameda Research, and Gary Wang, the co-founder of FTX, have both pleaded guilty to federal fraud charges and are currently assisting the Justice Department in their investigation of Sam Bankman-Fried, the previous CEO of FTX.
The announcement was made on December 22 by the U.S. Attorney for the Southern District of New York (SDNY) Damian Williams, who emphasized that this most recent significant development is not expected to be the last of its kind.
He said, “As I said last week, this investigation is ongoing and moving very quickly. I also said last week’s announcement would not be our last and let me be clear once again, neither is today’s. I’m announcing that SDNY has filed charges against Caroline Ellison and Gary Wang in connection with their roles in the frauds that contributed to FTX’s collapse. Both Ms. Ellison and Mr. Wang has pleaded guilty to those charges and both are cooperating with the SDNY.”
Williams also acknowledged that SBF is currently in the custody of the Federal Bureau of Investigation (FBI) and that he is on his way back to the U.S., where he will be transferred directly to the Southern District of New York to appear before a judge “as soon as possible.”
Williams also used the statement to provide a stern warning to anyone who could have participated in wrongdoing at FTX or Alameda. He added, “Now is the time to get ahead of it. We are moving quickly and our patience is not eternal.”
A Multiyear Scheme to Defraud Equity Investors in FTX
In a separate legal action, the U.S. Securities and Exchange Commission (SEC) said on December 21 that it has charged Ellison and Wang for their rules in a multi year plan to defraud equity investors in FTX. The SEC added that it is also probing other securities law breaches as well as other entities and persons related to the misconduct as well.
The SEC mentioned that both Ellison and Wang are helping them with their ongoing investigations. Meanwhile, after waiving his right to a formal extradition process that may have taken weeks, SBF was officially handed over from the custody of the Bahamas to the authorities of the U.S. on December 21.
His attorney indicated that SBF wanted to move the process forward more quickly because he is currently motivated to make things right with the customers. On the other hand, Ellison’s recent guilty plea and cooperation with the SDNY may come as no surprise to some people, given that on December 5, she was apparently seen at a coffee shop that was only a short walk away from the U.S. Attorney’s Office as well as the New York FBI office.
Caroline Ellison to Cooperate with U.S. Attorney’s Office
According to a recently revealed plea deal that Caroline Ellison entered into with the U.S. Attorney’s Office for the Southern District of New York, she will not be permitted to leave the continental U.S., and she will be required to surrender any proceeds that were obtained from the conduct of the acts she has been charged with.
The plea deal was obtained for the first time by New York’s Inner City Press, which is a publication that follows court proceedings at the U.S. court located in the city. It is stated in the deal that if Ellison completely cooperates with the investigation that is being conducted by the SDNY, as well as any other agency of law enforcement that is assigned by the office, then she will not be further put on trial criminally.
However, this will be done with the exception of potential criminal tax violations in relation to the wire and commodity fraud charges that occurred from intermingling funds between accounts held by FTX and Alameda. The information regarding some of the potential charges has been removed from one paragraph of the paper, which has been redacted.
Ellison will be able to post bail if she is able to provide a personal recognizance bond in the amount of $250,000 and if she agrees to limit her travel to the continental U.S. In addition to that, she will be required to hand over any travel documents that she currently possesses. The terms of the plea deal also include provisions stating that if Ellison is not a citizen of the U.S., it is highly likely that she will be required to leave the country immediately
It is generally accepted that Ellison is a citizen of the U.S. However, it is unknown whether or not she may have renounced her nationality in favor of a citizenship of convenience for the purpose of dodging taxes. This is a common practice among some crypto market participants who reside outside of the country, as the U.S. taxes non-residents.
