Sam Bankman Fried’s ex-girlfriend, and one of his closest friends, pleaded guilty to fraud and have cooperated with US authorities investigating the collapse of FTX.
This revelation was made as Mr Bankman-Fried was about to arrive in New York for one of the largest US fraud trials. He was to face a trial over the collapse of his cryptocurrency exchange, FTX.
The 30-year-old was willing to be extradited from the Bahamas earlier in the week and could appear before a US court on Thursday.
Caroline Ellison was Mr Bankman-Fried’s ex-girlfriend. She is 28 years old and was the joint chief executive at Alameda Research. Gary Wang, 29 is the co-founder of FTX.
Mr Bankman-Fried's ex-girlfriend Caroline Ellison, 28, who was joint chief executive of Alameda Research, and #FTX co-founder Gary Wang, 29, pleaded guilty to defrauding investors. SBF could appear in court as soon as Thursdaypic.twitter.com/UkxFl3kouE https://t.co/9VyiDvviGG
— Share_Talk ™ (@Share_Talk) December 22, 2022
In a video posted to Twitter Wednesday night, Manhattan Attorney Damian Williams announced their pleas.
Williams appealed to others who were involved in the fraud to come forward.
He stated that “if you were involved in misconduct at FTX, Alameda or FTX, now is the best time to move on.”
“We are moving fast and patience is not an option.”
He said, “I also stated that last week’s announcement would not have been our last, but let me be very clear, today isn’t.”
According to the FT, Mr Wang pleaded guilty four times to fraud, while Ms Ellison pleaded guilty seven to charges including conspiracy to commit money laundering and securities fraud.
Separately, Ms Ellison and Mr Wang were charged by the U.S. Securities and Exchange Commission and the U.S. Commodity Futures Trading Commission. Both were cooperating, according to the SEC.
Ilan Graff, a lawyer representing Mr Wang, said to Reuters that Gary had accepted responsibility for his actions and that he takes seriously his obligations under the terms of a cooperating witness. Ms Ellison’s attorney did not respond.
Last week, Mr Bankman Fried was informed that he faces a series of US criminal charges which could lead to a sentence of over 100 years imprisonment.
The lawyers representing Mr Bankman-Fried said that he consented to be extradited from a “desire of making the relevant customers whole”.
Officials from the FBI, the US Marshals Service and other agencies arrived in the Bahamas Wednesday to take Mr Bankman-Fried aboard a private flight to America. He was scheduled to be taken to the airport by US Marshals Service officials at 11:59 PM UK time. After being extradited, Mr Bankman Fried could be allowed to appeal for bail.
In the beginning, he suggested that he would resist any attempt to bring him to the USA. He denied wrongdoing.
He was a former billionaire crypto entrepreneur who donated millions to Democrat politicians as well as made large gifts to charities. He believed in “effective altruism”, which aims to raise as much money for charity as possible.
The US authorities accuse him of committing fraud by using customer funds. More than one million creditors were left out after the collapse of FTX, a cryptocurrency exchange worth $32bn (£26bn), on November 11.
Mr Bankman-Fried is accused of using deposits from his offshore cryptocurrency exchange for risky bets at the hedge fund. The funds eventually left an $8 billion black hole.
Jerone Roberts was his lawyer. He said that he was anxious to leave and that if it can be done today, that would be fine, the Nassau Guardian reported.
After a hearing, confirming that he would be extradited to the United States, he was taken back to His Majesty’s Prison Fox Hill in Nassau and placed on hold until Wednesday night.
The US authorities requested that he be extradited in order to face wire fraud, money laundering, and conspiracy charges.
Two Stanford University law professors, Joseph Bankman, and Barbara Fried raised him in California. Mr Bankman-Fried made a lot of money early in his career with Bitcoin.
A graduate of the prestigious Massachusetts Institute of Technology (MIT), Mr Bankman-Fried founded the crypto trading firm Alameda Research and FTX a year later.
FTX, based initially in Hong Kong, moved its headquarters to the Bahamas in 2021. Mr Bankman-Fried stated that he was attracted by the country’s crypto regulatory system.
He is known in financial circles by his initials SBF. T-shirts and shorts often characterized his unconventional figure.
When asked by Financial Times in May 2022 if he was concerned about losing money on risky trades he said that he had “way more examples of people who had very little and who ended up making a lot out of crypto and who it changed their lives”.
He has given a series of interviews since FTX’s fall to explain the events and defend them.
He said that the implosion of the cryptocurrency exchange was very different to the Bernie Madoff Ponzi scheme in which Madoff fraudulent clients of $65bn by fabricating gains over decades at his fund.
Mr Bankman-Fried stated that he thought it read very differently. If you take a look at Bernie Madoff’s story, there was no business there. It was just one Ponzi scheme. FTX was a legitimate business.”
John Jay Ray is handling the restructuring of FTX, a veteran who managed Enron’s bankruptcy in 2001.
In a court filing, he stated that he had never seen such a failure in corporate controls or such a complete lack of reliable financial information like this.
He said that FTX was run by “a small group of inexperienced and unsophisticated individuals” who were potentially compromised
