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The top manager of the FTX crypto exchange and the CEO of Alameda Research pleaded guilty to fraud.

Published: 2022-12-23

Two members of the inner circle of the former head of the FTX crypto exchange Sam Bankman-Fried pleaded guilty to fraud against investors of the trading platform and expressed their willingness to cooperate with the investigation.

Yesterday, the US Securities and Exchange Commission (SEC) accused former FTX CTO and co-founder Gary Wang and former CEO of Alameda Research Caroline Ellison of fraud. Shortly thereafter, Damian Williams, District Attorney for the Southern District of New York, said that both defendants pleaded guilty and began to cooperate with the investigation.

According to the SEC, between 2019 and 2022. Ellison, at the behest of Bankman-Fried, manipulated the price of the FTT cryptocurrency issued by FTX by buying them in bulk in the market to maintain the price. The digital asset served as collateral for FTX client funds, which were transferred to the cryptocurrency hedge fund Alameda - it was owned by Wan and Bankman-Freed, and managed by Allison. At the same time, investors were told that Alameda was nothing more than one of the clients, deprived of all privileges. Ellison and Wang knew, or should have known, that these claims were not true.

The apparently illegal actions of the two top executives, however, were critical to FTX's success, the investigation alleges. In doing so, Wang wrote a computer code that automatically routed funds from FTX to Alameda. And even when it became clear that Alameda and FTX would not be able to meet customer demands, Bankman-Fried, with the knowledge of Allison and Wang, transferred several hundred million more dollars of assets from FTX to Alameda.