Sam Benkman-Fried, the founder of the FTX crypto exchange, was taken into the custody of the FBI from the Bahamas to the United States, where he is accused of fraud. And FTX co-founder Gary Wang and former head of Alameda Research Caroline Ellison pleaded guilty to fraud and are cooperating with the investigation.
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Caroline Ellison, 28, the former CEO of Alameda Research, a company founded by Benkman-Fried, and FTX co-founder Gary Wang, 29, pleaded guilty to charges including wire transfer fraud, securities fraud and commodity fraud.
“They are both cooperating with the Southern District of New York,” U.S. Attorney Damian Williams said in a video message posted on social media Wednesday night.
He added that everyone else who was involved in the fraud should contact his office because “our patience is not forever” and further criminal charges against others are possible.
“The unexpected guilty plea was announced at the same time that Benkman-Fried was extradited from the Bahamas by US law enforcement.
He is expected to appear in federal court in New York on Thursday.
Prior to Benkman-Fried’s extradition, U.S. prosecutors did not publicly disclose that Ellison and Wang could face criminal charges or that they had pledged to cooperate with the investigation.
Ellison and Wang signed plea agreements on December 19, in part in exchange for a promise that prosecutors would recommend a reduction in their sentences if they fully cooperated with the investigation.
Without such an agreement, Allison, who is also charged with conspiracy to launder money, could face up to 110 years in prison. Wang can get up to 50 years old.
Both were released on $250,000 bail following their secret court hearings with movement restrictions in the continental United States.
“Gary has taken responsibility for his actions and takes his obligations as a cooperating witness seriously,” Wang’s attorney, Ilan Graff, said in a statement.
Ellison’s attorney did not immediately respond to a message asking for comment.
In a lawsuit filed on Wednesday, the SEC said Wang and Ellison were “active participants” in what it said was a Benkman-Fried scheme to defraud FTX investors and defraud its customers.
Wang created the programming code that allowed Alameda Research to redirect FTX client funds. Allison then used the embezzled funds for Alameda’s activities.
Authorities in the Bahamas arrested Benkman-Fried last week at the request of the US government. U.S. prosecutors allege he played a central role in FTX’s rapid collapse and kept its problems hidden from the public and investors.
“A 30-year-old man could potentially spend the rest of his life in prison.
Bahamas Attorney General Ryan Pinder said on Wednesday that Benkman-Fried had agreed to extradition to the United States.