FTX founder Sam Bankman-Fried's associates admit charges over cryptocurrency exchange collapse
Two top associates of FTX founder Sam Bankman-Fried have pleaded guilty to criminal charges in the collapse of the cryptocurrency exchange, a federal prosecutor said.
The please came as the entrepreneur was being flown to the US from the Bahamas in FBI custody.
Carolyn Ellison, the 28-year-old former CEO of Alameda Research, a trading firm started by Bankman-Fried, and Gary Wang, the 29-year-old who co-founded FTX with Bankman-Fried, pleaded guilty to charges including wire fraud, securities fraud and commodities fraud.
"They are both cooperating with the Southern District of New York," US attorney Damian Williams said on Wednesday night, adding anyone else who participated in the fraud should reach out to his office because "our patience is not eternal" and further criminal charges against others were possible.
The surprise guilty pleas were announced as Bankman-Fried was being extradited from the Bahamas by US law enforcement to answer to charges tied to his role in FTX's failure.
He is expected to appear in a federal court in New York City on Thursday.
Before Bankman-Fried was in the air, US prosecutors hadn't publicly revealed that Ellison and Wang were facing potential criminal charges or that they had agreed to work with investigators.
It was unclear whether Bankman-Fried, who has apologised for FTX's collapse but denied defrauding anyone, was also in the dark.
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In a parallel civil complaint filed Wednesday, the Securities and Exchange Commission said Wang and Ellison were "active participants" in what it alleged was Bankman-Fried's scheme to defraud FTX investors and swindle its customers.
Wang created the software code that allowed Alameda to divert FTX customer funds. Ellison then used the misappropriated funds for Alameda’s trading activity, the SEC said.
Bahamian authorities arrested Bankman-Fried last week at the request of the US government.
US prosecutors allege he played a central role in the rapid collapse of FTX and hid its problems from the public and investors.
The SEC and prosecutors said Bankman-Fried illegally siphoned off customer deposits on the FTX platform and used it to enable Alameda's trading, buy real estate and make huge campaign donations to US politicians.
Bankman-Fried was one of the world’s wealthiest people on paper, with an estimated net worth of $32 billion (£31.3bn).
He was a prominent personality in Washington, donating millions of dollars toward mostly left-leaning political causes and Democratic political campaigns.
FTX grew to become the second-largest cryptocurrency exchange in the world.
He has said that he did not "knowingly" misuse customers’ funds.