Two of Sam Bankman-Fried’s top associates have secretly pleaded guilty to criminal charges related to the collapse of the FTX cryptocurrency exchange.
They are now cooperating with investigators, according to a federal prosecutor.
Mr. Bankman-Fried, now in FBI custody, has now been extradited and extradited to the US from the Bahamas.
Carolyn Ellison, the 28-year-old former CEO of Alameda Research, a trading firm founded by Mr. Bankman-Fried, and Gary Wang, the 29-year-old co-founder of FTX, pleaded guilty to charges that include wire fraud, securities fraud. fraud and commodity fraud.
“They are both cooperating with the Southern District of New York,” U.S. Attorney Damian Williams said Wednesday night in a video statement released on social media.
He added that anyone else involved in misconduct at FTX or Alameda should contact his office because “our patience does not last forever” and further criminal charges against others are possible.
The guilty pleas came as a surprise as Mr Bankman-Fried was en route to the US ahead of an appearance in a New York federal court on Thursday to answer charges related to the FTX failure.
Before Bankman-Fried aired, US prosecutors had not publicly disclosed that Ms. Ellison and Mr. Wang faced possible criminal charges or that they had agreed to cooperate with investigators.
It is not known whether Mr Bankman-Fried, who apologized for the collapse of FTX but denied defrauding anyone, was aware of the guilty pleas or their cooperation.
The two executives signed plea agreements on Dec. 19, in part in exchange for a promise that prosecutors would recommend reduced sentences if they fully cooperated in the investigation.
Without such an agreement, the couple would have faced heavy prison terms. Ms. Ellison, who also faces a money laundering conspiracy charge, could be sentenced to up to 110 years in prison and Wang could be sentenced to up to 50 years in prison.
Both were released on $250,000 bail after secret court appearances. They are not allowed to leave the continental United States.
“Gary has accepted responsibility for his actions and takes seriously his obligations as a cooperating witness,” said Mr. Wang’s lawyer, Ilan Graf.
A lawyer for Ms. Ellison did not immediately respond to messages seeking comment, the Associated Press reports.
The plea agreements are by no means the end of the story for Ms. Ellison and Mr. Wang.
In a separate civil complaint filed Wednesday, the Securities and Exchange Commission said they were “active participants” in Mr. Bankman-Fried’s scheme to defraud FTX investors and defraud its customers.
The SEC says Mr. Wang created the software code that allowed Alameda to divert FTX customers’ funds, and Ms. Ellison then used the misappropriated funds for Alameda’s trading activity.
Mr. Bankman-Fried was arrested last week by Bahamian authorities at the request of the US government. Prosecutors allege he played a central role in FTX’s rapid collapse and hid its problems from the public and investors.
He is accused of illegally withholding customer deposits on the FTX platform and using them to enable Alameda’s trades, buy real estate and make huge campaign donations to left-wing US politicians.
At age 30, the founder and former CEO of FTX, once worth tens of billions of dollars on paper, faces the prospect of spending the rest of his life in prison.
Initially denied bail by a Bahamian judge, he was held at Fox Hill Prison in the Bahamas, which has been reported by human rights activists to be unsanitary and infested with rats and insects.
On Wednesday, Bahamas Attorney General Ryan Pinder said Mr Bankman-Fried had agreed to be extradited to the US.
He was seen leaving Nassau Magistrates’ Court in a dark SUV earlier Wednesday after waiving his right to challenge extradition.
Mr Bankman-Fried’s lawyers will be able to apply for bail at his initial US court appearance.
With an estimated net worth of $32 billion on paper, the disgraced fintech CEO grew FTX to become the second largest cryptocurrency exchange in the world.
He has said he did not “knowingly” misappropriate customer funds and believes his millions of angry customers will eventually be compensated for their losses.
But at a congressional hearing last week, FTX’s new CEO John Ray III, who is in charge of the company’s bankruptcy and who previously oversaw the aftermath of Enron’s collapse, bluntly disagreed, saying: “I will not do we ever get all these asset returns.”
With a report from the Associated Press