Things are getting more complicated for Sam Bankman-Fried: while he is facing 8 charges, 2 of his former lieutenants, namely Caroline Ellison and Gary Wang, have agreed to help the justice system in their investigation. The two men have pleaded guilty to the various charges against them.
Sam Bankman-Fried is isolated
Caroline Ellison and Gary Wang, who until recently were his closest associates, have both joined forces against Sam Bankman-Fried, the former CEO of FTX, who is due to appear in court in the US.
The information was revealed by prosecutors in the Southern District of New York (where SBF is scheduled to be heard), who said they had filed charges against Caroline Ellison (former CEO of Alameda Research) and Gary Wang (co-founder of FTX) to obtain their cooperation in their investigation of FTX.
In a statement, US Attorney Damian Williams said that Sam Bankman-Fried’s former colleagues had both pleaded guilty and agreed to cooperate with justice.
Statement of U.S. Attorney Damian Williams on U.S. v. Samuel Bankman-Fried, Caroline Ellison, and Gary Wang pic.twitter.com/u1y4cs3Koz
– US Attorney SDNY (@SDNYnews) December 22, 2022
The prosecutor took the opportunity to invite anyone involved in the collapse of FTX to come forward and face justice on their own:
Let me reiterate a call I made last week. If you have contributed to the mismanagement of FTX or Alameda, now is the time to step up to the plate. We are moving fast, and our patience is not eternal. “
Elsewhere, Damian Williams also confirmed the news that SBF was on its way to the US:
Sam Bankman-Fried is now in FBI custody and is on his way back to the US. He will be transported directly to the Southern District of New York, and will appear before a judge in that district as soon as possible. “
Without naming any specific names, the prosecutor said the courts also plan to file charges against other figures involved in the FTX empire.
Serious charges against the 2 partners
Alongside the prosecutors mentioned above, the US Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) have both filed civil charges against Caroline Ellison and Gary Wang.
SEC Chairman Gary Gensler himself issued a statement to clarify what the two were accused of doing:
“In the course of the investigation, the two companies were found to have engaged in fraudulent conduct.
As part of their deception, we allege that Caroline Ellison and Sam Bankman-Fried conspired to manipulate the price of FTT, a trading platform token that was an integral part of FTX, to support the value of their house of cards. […] We further allege that Ms. Ellison and Mr. Wang played an active role in a scheme to abuse FTX customer assets to support Alameda and provide collateral for margin trading. “
The CFTC accuses Caroline Ellison of fraud and misrepresentation, and claims that Gary Wang set up hidden features on the FTX platform that allowed Alameda Research to tap into its reserves on an “unlimited” basis. Furthermore, it appears that Alameda Research’s trading system favoured its own platform, for example by reducing the time of its transactions or by hiding certain data.
Of course, the funds in question belonged to FTX’s clients.
