FTX Fraud Ringleaders Ellison and Wang Take Guilty Pleas

Two of Sam Bankman-Fried’s top executives have pleaded guilty to federal fraud charges in the ongoing FTX case. Meanwhile, the man himself could appear before a U.S. judge as early as today.

Late on Wednesday, Dec. 21, Caroline Ellison and Gary Wang pleaded guilty, according to the U.S. attorney for the Southern District of New York. Ellison was the former chief executive of Alameda Research, and Wang was a founder of the FTX exchange.

The pair have also agreed to cooperate in the case against crypto’s public enemy number one – Sam Bankman-Fried, according to the New York Times.

Sam Bankman-Fried is now in F.B.I. custody after agreeing to be extradited from the Bahamas earlier on Dec. 21. Attorneys said that he would be brought before a judge as early as possible, maybe even on Dec. 22.

Under U.S. law, he must be brought before a court in Manhattan within two days of arriving.

FTX Wreckage Analyzed

The lawyer for Gary Wang said, “Gary has accepted responsibility for his actions and takes seriously his obligations as a cooperating witness.” There was no comment from Ellison’s lawyer, according to the report.

Prosecutors have accused Sam Bankman-Fried of defrauding customers, investors, and lenders. Additionally, liquidators are sifting through the FTX wreckage on the trail of as much as $8 billion in missing funds.

Charges against him include fraud and diverting customer funds to buy real estate, lend out, make dubious investments through Alameda, and make political donations.

At a hearing on Dec. 21, Sam Bankman-Fried told judge Shaka Serville, “I do wish to waive my rights to formal extradition proceedings,”

As reported by BeInCrypto on Dec. 21, distressed investors have started inquiring about the claims of customers with assets stuck on FTX.

SEC Chair Gary Gensler alleged that Ellison and Wang “played an active role in a scheme to misuse FTX customer assets to prop up Alameda and to post collateral for margin trading.”

According to FTX’s new chief financial officer, Mary Cilia, the company had over $1 billion in assets identified. It has located around $720 million in cash assets in U.S. financial institutions. These have been authorized to hold funds by the Department of Justice.

She added that roughly $130 million was being held in Japan, and $6 million was reserved for operational expenses such as payroll. A remaining $423 million at unauthorized U.S. institutions is primarily with a single broker, she confirmed.

Can On-Chain Analysis Help?

Blockchain.com CEO Peter Smith has been pondering the use of on-chain analysis in tracing the FTX funds.

Speaking to Fox Business on Dec. 20, Smith said that the banking system is the biggest hurdle when it comes to tracking money.

“The most challenging thing for firms working on this today is when money moves off chain and into the banking system, because they’re no longer able to track it.”