U.S. Attorney Damian Williams said Wednesday that FTX co-founder Gary Wang and former Alameda Research co-CEO Caroline Ellison had pled guilty to federal charges in the Southern District of New York.
Simultaneously, a civil lawsuit was filed with the Securities and Exchange Commission against Samuel Bankman-Fried and Wang, accusing them of engaging in “a multiyear plan to defraud equity investors in FTX, the crypto trading platform they co-founded.”
As part of a larger scheme to increase Alameda Research’s available collateral for lending, Ellison was accused by the SEC of engaging in artificial manipulation of FTT, FTX’s self-issued token.
Some of the largest cryptocurrency companies, like Voyager Digital and BlockFi Lending, have recently filed for bankruptcy, and their debts to Alameda Research have been mentioned.
The allegations against Ellison and Wang were not specified by Williams. According to the SEC, while working for Alameda and FTX, respectively, Ellison and Wang conspired to aid Bankman-Fried in allegedly cheating FTX consumers.
The SEC claims that Alameda used client cash to make its own trades after Wang installed a software backdoor in FTX’s platform. Bankman-Fried governed Alameda until 2021, when Ellison took over with Sam Trabucco, who left the city in August of the following year.
For their roles in the multibillion dollar collapse of FTX, Ellison, 28, and Wang, 29, are the second and third persons to be prosecuted. This month, a federal grand jury indicted 30-year-old Bankman-Fried.
In a statement, Wang’s lawyer said his client “takes seriously his duty as a cooperating witness” and “has taken responsibility for his acts.”
A representative for Ellison did not immediately return a call from CNBC seeking comment. A representative for Bankman-Fried did not want to comment.
