FTX’s Gary Wang and Alameda’s Caroline Ellison plead guilty to fraud, duo “cooperate” with U.S. authorities

Damian Williams said both Caroline Ellison and Gary Wang have cooperated with law enforcement. The U.S. Securities and Exchange Commission (SEC) also charged Wang and Ellison the same day, and the Commodity Futures Trading Commission (CFTC) followed with charges. “Caroline Ellison and Gary Wang admit responsibility“, the CFTC said in a statement Wednesday.

Wang and Ellison cooperate with law enforcement

U.S. Attorney Damian Williams and the SDNY Department of Justice (DOJ) have announced that the government has filed fraud charges against Gary Wang, co-founder of FTX, and Caroline Ellison, CEO of Alameda Research.

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

“Both pleaded guilty“, Williams told the press. “And they are both cooperating with the [SDNY]. Let me reiterate a call I made last week. If you have been involved in misconduct at FTX or Alameda, now is the time to step up.“

Williams also told reporters that FTX co-founder Sam Bankman-Fried (SBF) is now in custody with the U.S. Federal Bureau of Investigation (FBI). SBF is “on his way back to the U.S.,” Damian Williams noted.

The attorney noted that SBF will be transported to the SDNY district and appear before a judge “as soon as possible.” “Many people in the Bahamas and the United States were instrumental in the speedy return of the defendant,” Mr Williams said. The U.S. Attorney thanked the Bahamas for its assistance in the investigation.

SEC and CFTC Follow SDNY’s Lead

The U.S. Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) also filed charges against Wang and Ellison on Wednesday.

“Ellison, under Bankman-Fried’s direction, promoted the scheme by manipulating the price of FTT, a cryptographic security token issued by FTX, by buying large quantities on the open market to support its price“, the SEC said. “FTT served as collateral for undisclosed loans by FTX of its clients’ assets to Alameda, a crypto hedge fund owned by Wang and Bankman-Fried and run by Ellison.“The SEC added:

Ellison and Wang are cooperating with the SEC’s ongoing investigation.

CFTC charges show that Wang added special features to FTX’s code to support Alameda Research. “As alleged in the Amended Complaint, Wang created features in the code underlying the FTX trading platform that allowed Alameda to maintain an essentially unlimited credit line on FTX” the CFTC said in a statement Wednesday.

“Ellison and Wang do not dispute their responsibility for the CFTC’s claims“, the CFTC added. “Both have consented to the entry of consent judgment orders as to their liability for committing fraud in violation of Section 6(c)(1) of the Commodity Exchange Act and CFTC Regulation 180.1.”