Sam Bankman-Fried’s FTX co-founder, as well as his ex-girlfriend, have both pleaded guilty to federal fraud charges as part of deal for leniency.
FTX’s Gary Wang and Alameda Research’s Caroline Ellison – who once dated the embattled crypto crook – entered the guilty pleas in exchange for easier sentences at the Southern District of New York Court today.
Bankman-Fried, 30, faces eight charges which include allegedly conning investors out of $1.8billion by diverting cash to his private crypto hedge fund Alameda Research, run by his 28-year-old ex-girlfriend.
Wang and Ellison have been charged ‘in connection with their roles and the frauds that contributed to FTX’s collapse,’ including wire fraud, securities fraud, and commodities fraud, U.S. Attorney Damian Williams said.
He confirmed that Bankman-Fried is in FBI custody after being extradited from the Bahamas.
Williams added that after entering their pleas, both Wang and Ellison were co-operating with New York officials in their case against the FTX founder.
The official warned other FTX fraudsters to come forward, or face the full wrath of the federal government.
Bankman-Fried, meanwhile, is set to be in SDNY court imminently, after being arrested by FBI officials while in the Bahamas.
He has been charged with orchestrating a multiyear fraud that diverted billions in customer money for personal uses, including buying millions of dollars of real estate on the Caribbean Islands.
Prosecutors contend he frauded customers, investors and lenders involved with his now defunct crypto firm, which was once one of the biggest in the world before its sudden fall last month.
The U.S. Securities and Exchange Commission said in a separate statement said it has also charged Ellison and Wang for their roles in a multi-year scheme to defraud equity investors of FTX.
Williams confirmed the pleas and the transfer of Bankman-Fried to New York was in connection with a ‘sweeping fraud scheme that contributed to FTX’s collapse and for a campaign finance scheme that sought to influence public policy in Washington.’
He went on to reiterate the federal court’s investigation into the alleged fraudulent activity carried out by brass at Bankman-Fried’s companies is still ongoing, saying specifically that today’s charges – announced in a pair of simultaneous SEC complaints against the two execs – are far from the last.
‘If you were participating in misconduct, now is the time to get ahead of it,’ Williams said, warning other prospective fraudsters to come forward or face more intense charges later.
‘We are moving quickly, and our patience is not eternal.’
Officials from Williams office added that Bankman-Fried – whose personal $16billion fortune vanished in the exchange’s $32billion implosion – could be arraigned before Judge Ronnie Abrams as early as tonight, time permitting.
Otherwise it is understood he will be held in overnight custody.
During his extradition Wednesday morning, Bankman-Fried was seen escorted by heavily armed guards at Odyssey executive jet facility next to Lynden Pindling International Airport in the Bahamas, ahead of his 6.25pm flight to the United States.
The alleged fraudster looked somewhat disheveled as he was pictured handcuffed exiting the nine-vehicle convoy, with several SWAT team SUVs present.
