Sam Bankman-Fried, founder of FTX, left the Bahamas Wednesday to face fraud charges. Federal prosecutors announced that two former associates had pleaded guilty and are now cooperating with authorities.
In a video posted to Twitter late Wednesday night, Damian Williams, Manhattan US Attorney, stated that Caroline Ellison (ex-CEO of Alameda Research) and Gary Wang (co-founder of FTX), had pleaded guilty for defrauding investors in crypto trading platform.
The revelation that two of Bankman-Fried’s most close former associates had agreed to cooperate with government was a significant step up in pressure on the former billionaire.
Williams stated that Bankman-Fried was taken into FBI custody. He is currently on his way to the U.S. and encouraged others to come forward.
William stated, “If you were involved in misconduct at FTX and Alameda,” “We are moving fast and patience is not an option.”
He added, “I also stated that last week’s announcement would not become our last, and let’s be clear, today isn’t.”
In a separate statement, the US Securities and Exchange Commission (SEC), Wednesday evening stated that Ellison and Wang were also being charged in connection with a multiyear scheme to defraud equity shareholders of FTX.
Also, the US Commodity Futures Trading Commission stated that it had brought fraud charges against Ellison & Wang.
Ellison’s attorney did not immediately respond to our request for comment.
Ilan Graff, Wang’s lawyer, stated in a statement that Gary has taken responsibility for his actions and is taking seriously his obligations as cooperating witnesses.
Bankman-Fried was last week indicted by federal prosecutors in Manhattan for stealing billions in FTX customer assets in order to plug losses at Alameda Research’s hedge fund, Alameda Research. This was in what US Attorney Williams called “one the largest financial frauds in American History.”
The cryptocurrency mogul, who is 30 years old, has admitted to FTX’s risk management failures but said he doesn’t believe he is criminally liable.
Bankman-Fried’s legal staff declined to comment.
Bankman-Fried was a rider in the crypto boom and became a multimillionaire and an influential US political donor. However, FTX’s crash wiped his wealth out and tarnished him reputation. A wave of customer withdrawals, amid concerns about Alameda commingling funds, drove the collapse.
Williams and the SEC made the announcement just hours after Bankman Fried took off from The Bahamas, having consented at a courthouse for extradition to the United States.
On Thursday, Bankman-Fried will likely appear in front of a Manhattan federal court. He is likely to be asked to plead guilty at his court appearance (also known as an arraignment). He would be asked to enter a plea at his court appearance, also known as an arraignment.
He will be charged with eight charges, including wire fraud and money laundering.
Bankman-Fried was detained in The Bahamas last week on an extradition request from the US. He lives there and FTX is based there. At first, he said he would not contest extradition. However, Reuters and other outlets reported that he would change his mind.
According to an affidavit that was read in court Wednesday, Dec. 20, he agreed to extradition partly out of a “desire for making the relevant customers whole.”
Bankman-Fried was dressed in a suit and stepped up to the witness boxes in court. He spoke clearly and steadily while he was sworn into office.
“Yes, I do want to waive my right for such formal extradition proceedings,” said he to Judge Shaka Serville.
Jerone Roberts was Bankman-Fried’s defense lawyer. He stated that his client was “anxious” to leave.
Judge said that he was satisfied that Bankman-Fried wasn’t “forced, coerced, or threatened” to make the extradition decision.
Bankman-Fried was appointed CEO of the $32 billion exchange on November 11.
(c), Thomson Reuters 2022
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