FTX co-founder Sam Bankman-Fried is led out of the Magistrate’s Court on December 21, 2022 in Nassau, Bahamas.
Joe Raedle | Getty Images
FTX co-founder Gary Wang and former Alameda Research co-CEO Caroline Ellison both pleaded guilty to federal charges in the Southern District of New York, U.S. Attorney Damian Williams said in a message Wednesday.
At the same time, the Securities and Exchange Commission published a civil complaint against both, alleging that they engaged in “a multi-year scheme to defraud investors of shares in FTX, the crypto trading platform co-founded by Samuel Bankman-Fried and Wang.”
Ellison was named in the SEC’s complaint for engaging in artificial manipulation of FTT, FTX’s self-issued token, as part of a broader effort to bolster Alameda Research’s available collateral for lending.
Alameda Research was linked to multiple loans from major crypto companies that have now filed for bankruptcy, including Voyager Digital and BlockFi Lending.
Williams did not provide specific details about the allegations against Ellison or Wang. The SEC alleges that both Ellison and Wang, in their respective roles at Alameda and FTX, assisted Bankman-Fried in allegedly defrauding FTX customers.
The SEC alleges that Wang created a software backdoor in FTX’s platform that allowed Alameda to divert client funds for its own trades. Alameda was led by Bankman-Fried until 2021, when Ellison took control along with Sam Trabucco, who departed Alameda in August 2022.
Ellison, 28, and Wang, 29, become the second and third people charged in connection with the multibillion-dollar collapse of FTX. Bankman-Fried, 30, was indicted in federal court earlier this month.
“Bankman-Fried and Wang thus gave Alameda and Ellison carte blanche to use FTX client assets for Alameda’s commercial activities and for any other purpose Bankman-Fried and Ellison saw fit,” the SEC said. Trabucco, who joined Alameda “in or around 2019,” according to the SEC, was not cited for any wrongdoing.
Wang’s lawyer said in a statement: “Gary has accepted responsibility for his actions and takes his obligations as a cooperating witness seriously.”
Ellison’s attorney did not immediately respond to CNBC’s request for comment. A spokesman for Bankman-Fried’s camp declined to comment.
This is breaking news. Check back for updates.
— CNBC’s Steven Kopack and Brian Schwartz contributed to this report.