Caroline Ellison, former Chief Executive of crypto hedge fund Alameda Research has been charged by the Securities and Exchange Commission (SEC) on multiple counts of fraud connected to the collapse of FTX.
Ellison, along with FTX founder Gary Wang, pleaded guilty to the fraud charges and now enter a plea deal after being accused of cooperating with ex-FTX CEO Sam Bankman-Fried’s crypto business that is alleged to have defrauded its customers’ funds.
The former Alameda Research exec pleaded guilty to seven counts of: wire fraud on consumers, conspiracy to commit wire fraud on FTX consumers, wire fraud on Alameda Research consumers, and conspiracy to commit wire fraud on Alameda Research consumers, conspiracy to commit commodities fraud, conspiracy to commit securities fraud, and conspiracy to commit money laundering.
Ellison, if found guilty of all seven counts, could potentially end up with a 110 year sentence in prison. Wang admitted to four counts of fraud, which includes wire fraud on FTX consumers and conspiracy to commit securities fraud. Wang could potentially face a 50 year prison sentence.
Wang and Ellison have stated their intentions to cooperate with the SEC and US attorneys in the prosecution of Bankman-Fried, who was recently arrested in the Bahamas but extradited to the US shortly after. He is expected to face trial in the Southern District of New York.
“Ellison and Wang were active participants in the scheme to deceive FTX’s investors and engaged in conduct that was critical to its success,” read an SEC statement.
FTX collapsed last month, sending shockwaves across the entire crypto industry. The crypto exchange was found to have leveraged its holdings of its FTT alt coin token to Alameda Research, ultimately relying on the tokens performance.
Prosecutors have labelled charges against Bankman-Fried, among them diverting billions of consumer money to other uses such as real estate, trading cryptocurrencies to Alameda Research, as well campaign donations to the Democratic Party.
Along with Bankman-Fried, the SEC identified Ellison and Wang as key individuals in FTX’s operations. The US regulator has accused Ellison to have misused customer deposits to fund Alameda Research, with Wang being alleged to have created a software that benefited such diversions of funds.
Damian Williams, the US Attorney who charged Ellison and Wang, called on other individuals connected to FTX operations to step forward, stating: “If you participated in misconduct at FTX or Alameda, now is the time to get ahead of it, we are moving quickly and our patience is not eternal.”
The details of the guilty pleas of Ellison and Wang are disclosed via court orders.
