A judge ruled FTX founder Sam Bankman-Fried could be released on $250 million bail and put under house arrest at his parents’ California home while he awaits trial in New York City on eight federal criminal charges. As Bankman-Fried fights the charges against him, some of his coworkers have already pleaded guilty to fraud charges and are cooperating with authorities.
Alameda Research CEO Caroline Ellison, Bankman-Fried’s ex-girlfriend, along with FTX co-founder Gary Wang, pleaded guilty to charges brought by the Southern District of New York. The two are also cooperating with the Securities and Exchange Commission investigation, according to the agency, which has leveled two more fraud charges against Bankman-Fried’s former associates.
While Bankman-Fried has repeatedly stated in multiple media interviews that he was not aware of any improper use of customer funds between the FTX exchange and the group’s sister company, trading firm Alameda Research, the SEC complaint alleges the exact opposite.
According to the complaint against Ellison and Wang, both allegedly committed fraud at the direction of Bankman-Fried. Ellison is charged with, among other things, manipulating the price of FTT tokens at Bankman-Fried’s request to inflate Alameda’s collateral. The SEC also claims Bankman-Fried told Ellison to use software code Wang created to borrow “virtually limitless funds from FTX,” all hidden from customers and investors.
“I really deeply wish that I had taken a lot more responsibility for understanding what the details were of what was going on there,” Bankman-Fried said in a Good Morning America interview in early December.
Ellison and Wang aren’t the only FTX associates cooperating with authorities, either. FTX Digital Chair Ryan Salame alerted authorities to the fund-transferring scheme days before the company filed for bankruptcy. Salame’s whistleblowing helped lead to Bankman-Fried’s charges.
To date, Salame has not faced public charges. However, authorities do expect other FTX employees will.
“If you participated in misconduct at FTX or Alameda, now is the time to get ahead of it. We are moving quickly and our patience is not eternal,” U.S. Attorney Damian Williams said Wednesday night.