Two Bankman-Fried Associates Plead Guilty To Fraud

Tom Jowitt,
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ftx, cryptocurrency

FTX founder Sam Bankman-Fried arrives in America and is expected in court, as two former associates plead guilty to fraud charges

FTX founder and former CEO Sam Bankman-Fried left the Bahamas on Wednesday and has landed in New York, after he is alleged to have carried out “one of the biggest financial frauds in US history.”

It comes after two of his former associates have pleaded guilty to similar charges and are now co-operating with the US government, Reuters reported.

FTX filed for bankruptcy in November after a multi-billion dollar hole was found in its balance sheet.

Sam Bankman-Fried. Image credit: FTX
Sam Bankman-Fried. Image credit: FTX

Fraud charges

Sam Bankman-Fried bail was arrested in the Bahamas after US prosecutors accused the 30-year-old of misappropriating billions of dollars and defrauding investors.

Bankman-Fried initially fought against his extradition to the United States, before he changed his mind and agreed to be extradited.

He has been charged by the SEC of concealing his diversion of FTX customers’ funds to crypto trading firm Alameda Research, while raising more than $1.8 billion from investors, including approximately $1.1 billion from approximately 90 US-based investors.

Meanwhile Damian Williams, the US Attorney for the Southern District of New York, described the fraud Bankman-Fried is accused of as among the largest in US history.

The DoJ has charged Bankman-Fried with conspiracy to commit wire fraud, wire fraud, conspiracy to commit commodities fraud, conspiracy to commit securities fraud, conspiracy to commit money laundering.

Bankman-Fried has also been charged with conspiracy to defraud the Federal Election Commission and commit campaign finance violations.

Bankman-Fried denies the allegations, and should appear in US federal court in Manhattan later on Thursday morning.

Former FTX associates

Meanwhile Damian Williams, attorney general for the Southern District of New York, said in a video posted on Twitter late Wednesday night that Caroline Ellison, former CEO of Alameda Research, and Gary Wang, co-founder of FTX, had pleaded guilty to defrauding investors in the crypto trading platform.

Attorney general Damian Williams said that both Ellison and Wang, two of Bankman-Fried’s closest former associates, have decided to cooperate with the US government – a move that significantly ramped up pressure on the former multi billionaire.

Williams again urged others involved in the alleged fraud to come forward.

“If you participated in misconduct at FTX or Alameda, now is the time to get ahead of it,” Williams said. “We are moving quickly and our patience is not eternal.”

“I also said that last week’s announcement would not be our last, and let me be clear once again, neither is today’s,” he added.

According to Reuters, Ellison and Wang signed plea deals on Monday, that allows them to each post a$250,000 release bond.

The deal reportedly states that prosecutors may call for a judge to take their co-operation into account at sentencing if they “provided substantial assistance in an investigation or prosecution.”

It is easy to see why both agreed to co-operate with US authorities, as they potentially face 110 years in prison, and have to make a settlement payment – the amount of which will be decided by a US court.