2 top Sam Bankman-Fried associates plead guilty in FTX scheme, will cooperate with prosecutors

published 22 December 2022

Sam Bankman-Fried, the disgraced founder of cryptocurrency exchange FTX, is in FBI custody and en route from the Bahamas to New York City to face federal fraud charges tied to FTX's collapse, Manhattan U.S. Attorney Damian Williams said Wednesday night.

Bankman-Fried has indicated he will plead not guilty to the eight criminal charges filed against him. But Williams also announced in his video message that two of Bankman-Fried's top associates, Caroline Ellison and Gary Wang, secretly pleaded guilty to similar charges and "are both cooperating with the Southern District of New York."

Ellison, the former CEO of trading firm Alameda Research, pleaded guilty on Dec. 19 to seven counts including wire fraud and conspiracy to commit securities fraud. Bankman-Fried founded and owns most of Alameda, and he and Ellison were romantically involved at times, The Wall Street Journal reports. Wang, a software engineer who cofounded FTX and Alameda with Bankman-Fried, pleaded guilty to wire fraud and three other counts.

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Without a plea deal, Ellison, 28, faced up to 110 years in prison, while Wang, 29, could get up to 50 years. In exchange for their cooperation, the Justice Department agreed to recommend a reduction in their sentences. "Gary has accepted responsibility for his actions and takes seriously his obligations as a cooperating witness," Wang's lawyer Ilan Graff said in a statement. Williams encouraged anyone else who participated in Bankman-Fried's alleged fraud to come forward. "We are moving quickly and our patience is not eternal," he said.

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Peter has worked as a news and culture writer and editor at The Week since the site's launch in 2008. He covers politics, world affairs, religion and cultural currents. His journalism career began as a copy editor at a financial newswire and has included editorial positions at The New York Times Magazine, Facts on File, and Oregon State University.