October 2, 2023

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Two executives of Sam Bankman Fried’s Crypto Empire have pleaded guilty to fraud

Two former CEOs Cryptocurrency trading empire Sam Bankman Fried The Attorney General for the Southern District of New York pleaded guilty Wednesday night to federal criminal fraud charges and they are cooperating in the case against the shady businessman.

The two Caroline Ellisonwho was the CEO of a cryptocurrency trading company Alameda Researchand Gary Wang, founder of the cryptocurrency exchange FTX. They were key associates in Mr. Bankman Fried’s vast business empire, which was based primarily on FTX and Alameda.

The SEC also filed civil fraud charges against Ms. Ellison and Mr. Wang on Wednesday. The SEC said Ms. Ellison had misused FTX customer deposits to fund Alameda’s trading activity and that Ms. Wang had created software that allowed this transfer of funds to occur. The SEC’s case builds on the civil charges filed against Bankman Fried this month.

The guilty pleas and co-operation agreements are a major advance in the criminal fraud case against Mr Bankman Fried, who is in US custody after Acceptance of delivery from the Bahamas earlier on Wednesday. The mix of criminal and civil charges against the former top executives bolster allegations made by federal authorities that Mr. Bankman-Fred oversaw a comprehensive fraud operation from its inception in roughly 2019.

United States attorneys general and federal regulators said Bankman-Fred carried out a scam It has transferred billions of customer money for other uses, including buying real estate in the Bahamas, trading cryptocurrency in Alameda, making campaign donations, and investing in other crypto companies. Prosecutors allege he defrauded clients, investors and lenders of his cryptocurrency trading firm, which was one of the largest in the world before it collapsed into bankruptcy last month.

Ms. Ellison’s and Mr. Wang’s guilty pleas may prompt other former executives to cooperate with authorities.

In a statement on Wednesday evening, the US Attorney General, Damian Williams, reiterated a point he made last week when the criminal charges against Mr Bankman-Fried were announced. “If you engaged in misconduct at FTX or Alameda, now is the time to move on,” Mr. Williams said. “We move quickly and our patience is not eternal.”

Within two weeks Media raids Before arrest him On December 12, Mr. Bankman-Fred claimed he had done nothing wrong and had no intention of defrauding anyone. He also indicated that he was not fully aware of the commercial irregularities at Alameda, a company he co-founded in 2017.

In his statement, Mr. Williams said Mr. Bankman-Fred was in FBI custody and would be returned to the United States, brought before a judge as soon as possible. He is expected to appear in Federal District Court in Manhattan on Thursday.

Lawyers for Ms. Ellison declined to comment. “Gary has accepted responsibility for his actions and takes his obligations as a cooperating witness very seriously,” said Ilan Graf, attorney for Mr. Wang.

Bankman spokesman Fred declined to comment.

In her complaint, the SEC said Ms. Ellison, at the direction of Mr. Bankman-Fried, manipulated the price of a digital currency created by FTX, called FTT, by purchasing large amounts of the cryptocurrency token to support its price.

Alameda was one of the big companies that was trading FTT and used the crypto token as collateral for the loans it got from other big crypto companies to fund its trading.

Mr. Bankman-Fried, Ms. Ellison and Mr. Wang “were active participants in a scheme to hide material information from FTX investors, including through efforts by Mr. Bankman-Fried and Ms. Ellison to support the value of FTT,” said Sanjay Wadhwa, deputy director of the SEC’s enforcement division. artificially.”

This is a developing story. Check back for updates.