2 former FTX executives plead guilty to fraud charges

NEW YORK — Two former senior executives associated with FTX cryptocurrency founder Sam Bankman-Fried pleaded guilty to federal criminal fraud charges, the U.S. attorney for the Southern District of New York said on Wednesday night.

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Gary Wang, the co-founder of FTX, and Caroline Ellison, who served as CEO of Alameda Research, a hedge fund firm, are cooperating in the case against the disgraced entrepreneur, The New York Times reported.

According to unsealed records, the pair face civil criminal charges from the Securities and Exchange Commission, CNN reported.

The SEC said that Ellison, 28, had misused FTX customer deposits to fund Alameda’s trading activity, and that Wang, 29, had created software that allowed that diversion of funds to occur, the Times reported.

Ellison pleaded guilty to seven counts that include conspiracies to commit wire fraud, securities fraud and commodities fraud, and money laundering, The Washington Post reported. She faces up to 110 years in prison.

Wang, the co-founder of FTX, pleaded guilty to four conspiracy and fraud-related counts, according to the newspaper. He faces up to 50 years in prison.

“Gary has accepted responsibility for his actions and takes seriously his obligations as a cooperating witness.” Ilan Graff, an attorney for Wang, said in a statement. An attorney for Ellison could not be reached for comment.

Ellison and Wang were each released after posting $250,000 bail, the Post reported.

The charges came after civil charges were filed against Bankman-Fried last month.

The guilty pleas were announced while Bankman-Fried was being transferred to New York from the Bahamas, where he’d been held in prison for more than a week, Post reported.

U.S. attorney Damian Williams said Wang and Ellison were charged “in connection with their roles in the fraud that contributed to FTX’s collapse.”

“We continue to work around the clock and we are far from done,” Williams said in a prerecorded video announcement Wednesday evening.

Williams encouraged others who participated in misconduct in Bankman-Fried’s crypto empire to come forward, the Post reported.

A spokesman for Bankman-Fried declined to comment, according to the newspaper.

Bankman-Fried was arrested in the Bahamas on Monday after U.S. prosecutors filed criminal charges against him, according to a statement from the government of the Bahamas obtained by the Times.

Bankman-Fried has reportedly been under investigation by the Justice Department over the “sudden implosion of FTX,” which was a $32 billion company that filed for bankruptcy on Nov. 11, the Times reported.

FTX filed for bankruptcy when “it ran out of money after the cryptocurrency equivalent of a bank run,” according to The Associated Press. The Securities and Exchange Commission said Bankman-Fried illegally used investors’ money to buy real estate on behalf of himself and his family, the news organization reported.

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