- Former Alameda Research CEO Caroline Ellison and FTX co-founder Gary Wang are under SEC’s crosshairs.
- Ellison and Wang have pleaded guilty and are cooperating with the prosecutors.
- It remains the priority of the SEC to use all the available tools to bring the crypto industry into compliance – SEC chair, Gary Gensler.
The U.S. Security Exchanges Commission (SEC) and Commodity Futures Trading Commission (CFTC) have stated charges against former Alameda Research CEO Caroline Ellison and FTX co-founder Gary Wang, for manipulating the price of FTT, an FTX-issued exchange crypto token security.
On Wednesday, the U.S. Attorney, Damian Williams, revealed that the two were cooperating with the prosecutors and have already pleaded guilty to the charges filed against them, including wire fraud, security fraud, and commodities fraud.
Ellison and Wang signed a plea on December 12, partially agreeing that the prosecutors would recommend a reduction in their sentences if they fully cooperated in the ongoing investigation.
Earlier this month, the Southern District of New York charged the FTX founder, Sam Bankman-Fried, with eight crimes, including wire fraud, money laundering, campaign finance violations, and security fraud. The U.S. Attorney confirmed in a statement that SBF is being extradited to the U.S., adding that the ex-CEO was in FBI custody and would appear in court as soon as possible. The embattled ex-FTX CEO is in the custody of U.S. authorities after agreeing to be deported on December 21.
The SEC Chair Gary Gensler has stated in a statement:
“When FTT and the rest of the house cards collapsed, Mr. Bankman-Fried, Ms. Ellison, and Mr. Wang left investors holding the bag. Until crypto platforms comply with tested securities laws, risks of investors will persist.”
The SEC Deputy Enforcement Director Sanjay Wadhwa has also revealed:
“The three were active participants in a scheme to conceal material information from FTX investors through the efforts of SBF and Ellison to artificially prop up the value of FTT, which served as collateral for disclosed loans that Alameda took out from FTX under its undisclosed, and virtually unlimited line of credit. By surreptitiously siphoning FTX’s users’ funds onto the books of Alameda, defendants hid the real risk that FTX’s investors and customers faced.”
“It remains SEC’s priority to bring the crypto space into compliance” – Gary Gensler.
Additionally, the charges allege that from May 2019 to November 2022, SBF raised billions of dollars from investors by falsely touting FTX as a safe crypto asset trading platform, telling them that Alameda Research was just another customer with no special privileges.
“Ellison and Wang knew or should have known that such statements were false and misleading. Given their involvement in the fraudulent scheme to deceive FTX’s investors and engaged in conducts that were critical to its success, the defendants used misappropriated FTX customer funds for Alameda’s trading activity,” the complaint stated.
Noteworthy, the agency seeks injunctions against future securities law violations, prohibiting Ellison and Wang from participating in the issuance, purchase, offer, or sale of any securities except for their accounts.
Damian Williams has also stipulated that” if you participated in misconduct of FTX or Alameda, now is the time to get ahead of it. We are moving quickly, and our patience is not eternal.”
The crypto exchange came under pressure after C.Z., the CEO of Binance, noted on November 6 that he was planning to sell his remaining 500 million FTT holdings, FTX’s crypto asset security token. The case presented by SEC indicated that Ellison wanted to purchase Binance’s entire stake in FTX’s token for $22 at the direction of SBF.
The SEC chair has boldly stipulated that it remains a priority of the Security Exchange Commission to use all of the available tools to bring the crypto ecosystem into compliance due to the ongoing turmoil in the industry.
