Two Sam Bankman-Fried Colleagues Plead Guilty to Fraud in FTX Collapse

Alameda Research’s former CEO Carolyn Ellison and FTX co-founder Gary Wang have both admitted to criminal fraud. Two of Sam Bankman-partners Fried’s reportedly pled guilty to criminal charges relating to the demise of the FTX bitcoin exchange, according to a federal prosecutor.

“Related to their roles in the fraud that contributed to FTX’s collapse”, US attorney Damian Williams said Wednesday night, referring to the guilty pleas of Gary Wang, co-founder of FTX, and Carolyn Ellison, former CEO of Alameda Research, a trading business also created by Bankman-Fried.

Two Sam Bankman-Fried Colleagues Plead Guilty to Fraud in FTX Collapse
Two Sam Bankman-Fried Colleagues Plead Guilty to Fraud in FTX Collapse

The SEC alleges that between 2019 and 2022, Ellison, at Bankman-direction, Fried’s inflated the price of FTT, a crypto security token issued by the FTX exchange, by buying significant amounts on the open market. The assets of FTX’s clients were used as collateral for loans made to Alameda, a cryptocurrency hedge fund controlled by Wang and Bankman-Fried and managed by Ellison, with which FTX was not upfront about the relationship.

The lawsuit also says that Wang wrote the software code for FTX that enabled Alameda to redirect FTX client monies and that Ellison utilized hijacked FTX customer funds for Alameda’s trading activities.

The guilty pleas were made at the same time that Bankman-Fried was being extradited from the Bahamas to the United States to face charges related to his involvement in the demise of FTX.

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Former CEO of Alameda Research, Carolyn Ellison, and FTX co-founder, Gary Wang, have both committed criminal fraud. According to a federal prosecutor, two of Sam Bankman’s partners, Fried, pleaded guilty to criminal charges related to the collapse of the FTX bitcoin exchange.

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