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Two executives associated with failed cryptocurrency exchange FTX, which was once valued at $32 billion, have pleaded guilty to criminal charges, U.S. Attorney Damian Williams announced in a released video. late wednesdayThis is really bad news for FTX co-founder Sam Bankman-Fried. Because management says they broke the law on Bankman-Fried’s direction.
Bankman-Fried, aka SBF, takes on whirlwind media tour and looks to win hearts with his ‘Zee Shak, How It Can Be Made’ such a mistakeAct, his partner in cryptocrime, had a contract with the federal government.
FTX co-founder Gary Wang pleaded guilty to four counts, including wire fraud, conspiracy to commit wire fraud, conspiracy to commit merchandise fraud, and conspiracy to commit securities fraud. The 29-year-old previously worked at Google and when he was in high school he came across SBF. math camp Together, according to CoinDesk.The king faces a maximum sentence of 50 years in prison ABC News.
Alameda Research CEO Caroline Ellison, who was reportedly romantically involved with SBF at one point, has been accused of seven counts, including wire fraud, a conspiracy to commit wire fraud, a conspiracy to commit securities fraud, and a conspiracy to launder money. Ellison and SBF met while working together at the trading company Jane Street. The 28-year-old defendant faces up to her 110 years in prison.
SBF was arrested in the Bahamas last week and charged with eight counts in the US, including wire fraud, money laundering and illegal political contributions.A very public supporter of the Democratic Party and a personal supporter of the Republican Party, the SBF was originally sitting in a Bahamas jail where it planned to fight extradition to the United States. The plan was changed after a few days with a clink.
During his post-collapse media tour, SBF tried to claim he had no idea what was going on at Alameda Research, the hedge fund he founded with FTX. SBF even claimed that funds were not intentionally mixed between Alameda and FTX, but SBF confirmed in the same interview that FTX users sent money to Alameda and debited their accounts. Given the fact of admitting, the explanation was clearly bullshit. crypto platform. why? Because no one gives FTX a bank account.Alameda Research, as SBF Explained in 2021a name deliberately chosen to sound boring and respectable, and eventually managed to get a bank account.
“I understand that even the name Alameda Research has a story behind why the name Research is there….” asked podcast host Ash Bennington. June 2021.
“Yeah, I mean, it’s kind of a brief backstory.
“Especially in 2017, if you name your company, like, ‘We do cryptocurrency, bitcoin, arbitrage, multinational stuff,’ give us an account.” I don’t want to give the bank any reason not to.bank account if that is your company name […] But everyone wants to serve a research institute,” SBF continued.
In addition to those criminal charges outlined by the Justice Department, the SEC announced civil charges against Wang and Ellison late Wednesday. The SEC complaint alleges that the fraud started from the beginning, claiming billions of dollars from investors.
from the SEC civil litigation:
FTX has raised over $1.8 billion from investors, including US investors who have purchased FTX shares believing that FTX has appropriate controls and risk management measures. Unbeknownst to these investors (and his FTX trading clients), Bankman-Fried orchestrated years of massive fraud that extorted billions of dollars of the trading platform’s customer funds from him. Diverted for his own gain and helped grow his cryptocurrency empire. Defendants actively participated in the scheme and engaged in conduct that was essential to the scheme’s success.
The SEC also alleges that Wang built a backdoor for SBF and funneled FTX customer funds into Alameda. SBF has previously denied the existence of such a backdoor, saying it doesn’t even know how to code it. But the SEC said the backdoor was definitely real.
Wang participated in writing and creating the software code that allowed Alameda to repurpose FTX’s customer funds. Ellison used embezzled funds from her FTX clients for Alameda trading activities. And he Bankman-Fried used those client funds to make private venture investments, purchase luxury real estate, and make large political contributions.
Many news outlets describe what happened just days before FTX collapsed as a “bank interrogation”. That’s partly true, but obscures the real reason FTX fell apart. In fact, rival cryptocurrency exchange Binance, led by Changpeng “CZ” Zhao, bought a majority stake in his FTX in 2019. Token known as FTT. CZ then decided to cash out the crazy money, but FTX failed to provide a cash value for the worthless token, resulting in the first domino fall.
Many are angry at CZ for the move, including former FTX spokesperson Kevin O’Leary. $15 million Promote FTX. However, CZ was not doing anything illegal by demanding that his chips be cashed. CZ only called SBF’s bluff despite the fact that he was sitting in his own house of cards that could collapse at any moment. Binance’s token is currently the third largest variable price token. The crypto token behind Bitcoin and Ethereum.
However, the SEC complaint provides further insight into what SBF was allegedly doing. FTT token for 3 years of its existence.
Ellison forced Alameda to borrow billions of dollars from third-party lenders at Bankman-Fried’s direction beyond its “line of credit” with FTX. The majority of these loans were backed by Alameda’s holdings of FTT, illiquid cryptocurrency securities issued by FTX and provided free of charge to Alameda. Ellison, at Bankman-Fried’s direction, worked on automated purchases of his FTT tokens on various platforms, increasing the price of those tokens and inflating the value of Alameda’s collateral. This allowed Alameda to borrow even more money from outside lenders. Increased risk to lenders and FTX investors and customers, all facilitating the scheme.
Did you get the “By Bankman-Fried’s direction” part? That’s what comes up when one party is talking to the prosecutor and the other party is trying to win a court of public opinion.
Surprisingly, the SEC claims that SBF traded Alameda so poorly that his bad bets quickly caught up with him when the market deteriorated.
When cryptocurrency prices plummeted in May 2022, Alameda lenders demanded repayment of billions of dollars in loans. Alameda was unable to meet his loan obligations, even though he had already acquired billions of dollars in his FTX client assets by this time. Bankman-Fried, to the best of Defendants’ knowledge, has asked FTX to invest more than billions of dollars in customer assets to ensure Alameda maintains its lending relationship and continues to receive funds from lenders and other investors. was directed to be diverted to Alameda. Ellison then used his FTX client assets to pay off his Alameda debt.
And then, according to the SEC, it all fell apart.
Even in November 2022, when faced with billions of dollars in customer withdrawal requests that FTX was unable to meet, Bankman-Fried and Ellison decided to use Wang’s knowledge to raise billions of dollars. It misled investors who needed money to plug the hole. This brazen multi-year plan finally came to an end on November 11, 2022, when FTX, Alameda, and intertwined affiliates filed for bankruptcy.
Ellison’s bail is set at a very low $250,000, according to CoinDesk, but it’s not clear if Wang’s bail is set at the same amount. Curiously, the unsealed petition states that if Ellison is not a U.S. citizen, she may need to be deported after serving her sentence. Ellison is believed to have been born in America, CoinDesk We speculate that she renounced her US citizenship to avoid paying taxes.
Cryptocurrencies are essentially Ponzi A scheme used by powerful and connected people to extract wealth from those who put hundreds of dollars into the lottery in hopes of getting rich. But the game is rigged against them and the house always wins.Unless you’re an idiot casino manager.Former President Donald Trump famously lost money trying to run a casino .And SBF seems more likely to go down in history Trump and all other scams of this era. It may take some time before they are all published.
