Sam Bankman-Fried extradited to US and two top executives plead guilty

Sam Bankman-Fried, founder and former CEO of cryptocurrency exchange FTX, was extradited from the Bahamas by US law enforcement on Wednesday to respond to accusations about his role in FTX’s failure. He is expected to appear in a federal court in New York on Thursday.

Meanwhile, as the digital currency entrepreneur flies to the United States in FBI custody, a federal prosecutor announced Wednesday that two of Sam Bankman-Fried’s top aides had secretly pleaded guilty to the collapse of cryptocurrency exchange FTX and cooperated with investigators. Bahamas.

Carolyn Ellison, 28, former CEO of Alameda Research, a trading firm founded by Bankman-Fried, and Gary Wang, 29, co-founder of FTX, pleaded guilty to crimes, including wire transfer and securities fraud. and commodity fraud.

“Both are cooperating with the Southern District of New York,” US Attorney General Damian Williams said in a video statement posted on social media Wednesday night.

He added that anyone involved in the scam should reach his office because “our patience is not endless” and that it is possible to blame more on others.

The surprise denunciation was announced when Bankman-Fried was extradited from the Bahamas by US law enforcement to respond to accusations regarding his role in the failure of FTX. He was expected to appear in a federal court in New York on Thursday.

Before Bankman-Fried went on the air, US prosecutors had not made public that Ellison and Wang were facing potential charges or had promised to work with investigators.

It was unclear whether Bankman-Fried, who apologized for FTX’s collapse but denied defrauding anyone, was also in the dark.

Ellison and Wang signed plea bargains on December 19, in part in return for a promise that prosecutors would offer a reduction in sentences if they cooperate fully with the investigation.

Without such an agreement, Ellison, who also faces money laundering conspiracy charges, could face up to 110 years in prison. Wang can be up to 50 years.

Both were released on $250,000 (€235,000) bail after appearing in secret court, and their travels were limited to the continental United States.

“Gary has accepted responsibility for his actions and takes his obligations as a cooperating witness seriously,” said Wang’s lawyer, Ilan Graff.

Ellison’s lawyer did not immediately return messages seeking comment.

In a parallel civil complaint filed Wednesday, the Securities and Exchange Commission said Wang and Ellison were “active participants” in Bankman-Fried’s plan to defraud FTX investors and defraud its customers.

Wang created the software code that allowed Alameda to route FTX client funds. The SEC said Ellison later misused the funds for Alameda’s trading activity.

Bahamian authorities arrested Bankman-Fried last week at the request of the US government. US prosecutors allege that he played a central role in FTX’s rapid collapse and hid its problems from the public and investors.

The SEC and prosecutors said Bankman-Fried illegally withdrew customer deposits on the FTX platform and used it to trade Alameda, buy real estate and make large campaign donations to US politicians.

The 30-year-old could potentially spend the rest of his life in prison.

Bankman-Fried was initially released on bail by a Bahamian judge. The founder and former CEO of FTX, which was once worth tens of billions of dollars on paper, was later held at Fox Hill prison in the Bahamas, which human rights activists described as poor sanitation and infested with rats and insects.

On Wednesday, Bahamian Attorney General Ryan Pinder said Bankman-Fried had agreed to be transferred to the United States.

Reporters witnessed Bankman-Fried leave a Magistrates’ Court in Nassau in a dark SUV early Wednesday after waiving his right to appeal extradition.

Bankman-Fried’s attorney will be able to seek bail the first time he appears in a US courtroom.

Bankman-Fried was one of the richest people on paper in the world, with an estimated net worth of $32 billion. He was a prominent figure in Washington, donating millions of dollars to mostly left-leaning political causes and Democratic political campaigns. FTX has become the second largest cryptocurrency exchange in the world.

He said he didn’t “knowingly” misuse clients’ funds, and he believes his millions of angry clients will eventually get better.

In a congressional hearing last week, new FTX CEO John Ray III, tasked with driving the company into bankruptcy, openly contested these claims: “We’re never going to get all these assets back,” Ray said.

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