Another twist in the plot of the FTX crypto exchange fraud case, which could support an entire episode of the drama series currently produced by Disney. Two of the people closest to former FTX CEO Sam Bankman-Fried are cooperating with the New York attorney general’s office against him, the New York Times reports.
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The two are Caroline Ellison, CEO of hedge fund Alameda, and Gary Wang, who the ousted CEO co-founded the bankrupt crypto exchange. These are not just two former colleagues – but close friends. Alison Wang shared an apartment with Bankman-Fried in the Bahamas, and Alison was even romantically involved with the former CEO.
This was revealed as part of the confession of the two on Wednesday night to the offenses of conspiracy to commit securities fraud and money laundering. If charged with all of these offenses, the 28-year-old Allison faces up to 110 years in prison, but her cooperation with the authorities may soften the sentence.
In fact, as part of her plea deal with the authorities, she waived her defense against the charges, agreed to return the amount that the court would determine, and pledged to fully cooperate with all the authorities concerned. Allison will provide documents and evidence to the prosecutors and testify before a jury in each of the trials expected to take place against Bankman-Fried and the network she built. Undoubtedly, Alison and her former colleague Wang, helped and are helping the legal authorities and the American detective to move forward with the investigation quickly, and probably also contributed to Bankman-Fried’s decision to turn himself in to the American authorities.
Allison took deposit funds from FTX, Wang developed software that enabled the transfer
The main charges against Bankman-Fried relate to the fact that he made personal use of the money of the clients who deposited their money in the funds he owned. According to the claim, Bankman-Fried used the money to purchase real estate in the Bahamas, trade currencies in the Almeda hedge fund – an external body seemingly unrelated to FTX, invest in crypto companies and donate to politicians in Washington. However, according to the indictments, Alison and Wang also took part in the conspiracy: Alison took deposit funds from FTX to cover Almeda’s debts to its clients, while Wang developed the software – a sort of back door – that allowed the illegal transfer of funds between the two companies that are valued About 8 billion dollars.
These transfers pulled the rug out from under FTX’s financial stability and after rumors spread on Twitter about the financial hole in the crypto exchange, customers began withdrawing their money, until the company filed for creditor protection last month.
One of Alison’s defense claims against Bankman-Fried is that the latter actually ordered her to take funds from FTX in exchange for the FTT digital currency issued by the company itself, which was in fact worthless and the price manipulated by Bankman-Fried himself. Almeda was one of the largest funds that trade in the FTT coin and used it as a guarantee for loans that it raised from other crypto companies.
This seemingly contradicts Bankman’s version that he “didn’t know” about the currency alternatives. This claim was also heard by the company’s investors, such as the Sequoia Fund, which accused FTX of not revealing the close relationship between the two companies.
Another claim concerns ownership: Allison was not an owner in Almeda while Bankman-Fried owned 90% of the hedge fund while Wang owned the remaining 10%. According to the claim, Bankman-Fried not only had full control over Almeda, he also used to talk frequently with the foundation’s employees and had full access to all the books and databases. And yet, Almeda was excluded from the risk management and self-regulation processes that Bankman-Fried, so to speak, imposed on FTX.
Bankman-Fried made his way over the past day from the detention center in the Bahamas to the federal court in New York, where he was brought before a judge. During the discussion it was determined That Bankman-Fried will be released on bail of 250 million dollars, as part of the settlement between the federal prosecutors and the defenders of the founder of FTX.