Former FTX executives Caroline Ellison and Gary Wang pleaded guilty to charges of committing fraud as the exchange’s former CEO, Sam Bankman-Fried, was extradited to the US.
Ellison and Wang were given the boot by FTX’s new management in November. Before their dismissal, Ellison was the CEO of FTX’s sister firm, Alameda Research, while Wang was the CTO at FTX.
On Wednesday, the SEC accused the two executives of aiding Sam Bankman-Fried in defrauding FTX users. As per its complaints, Wang installed a backdoor in FTX that allowed Alameda Research to siphon customers’ funds. The SEC alleged that Ellison manipulated the price of FTX’s utility token FTT to inflate the valuation of Alameda Research's FTT holdings. This allowed them to mislead investors about FTX’s risk exposure, with the SEC noting,
“Bankman-Fried and Wang thus gave Alameda and Ellison carte blanche to use FTX customer assets for Alameda’s trading operations and for whatever other purposes Bankman-Fried and Ellison saw fit.”
The CFTC has also charged the two with violating interstate commerce laws and accused them of using their positions to defraud investors.
In her plea agreement, Ellison pleaded guilty to seven counts, including two counts of wire fraud and five conspiracy counts. Similarly, Wang pleaded guilty to wire fraud and three conspiracy counts.
Attorney Damian Williams noted the two ex-FTX executives have agreed to cooperate with US authorities. This will allow them to receive potential reductions in their sentences.
Meanwhile, Sam Bank-Fried was extradited from the Bahamas by the US authorities. The former CEO of FTX is expected to appear before a New York Federal Court on December 23.
