Fallen Crypto Billionaire Sam Bankman-Roast He was released on Thursday at $250m.
The 30-year-old faces eight charges related to his role in the collapse of the crypto exchange FTXThe maximum penalty is 110 years in prison. Bankman-Fried must remain under strict supervision at her parents’ home in Palo Alto, California, Judge Gabriel Korenstein said.
A day after being transferred from Bahamian to FBI custody and flown directly north to the airport, Bankman-Fried appeared dapper and tired in a dark blue suit and ankle chain. New York city.
The investigation comes after federal prosecutors announced that Carolyn Ellison, 28, the former CEO of crypto hedge fund Alameda Research and Bankman-Fried’s ex-girlfriend, and FTX co-founder Gary Wang, 29, had pleaded guilty to criminal charges. Attached to the slide.
The charges filed against the pair “relate to their roles in the fraud that contributed to the collapse of FTX,” US Attorney Damian Williams said. “Both Ms. Ellison and Mr. Wang have pleaded guilty to those charges, and they are both cooperating with the Southern District of New York.”
According to the agreement, Ellison pleaded guilty to seven counts of defrauding customers and investors of both FTX and Alameda. The charges against him carry a maximum sentence of 110 years. As part of the plea deal, he was released on a $250,000 bond.
Wang faces similar charges. His lawyer, Ilan Graf, said in a statement: “Gary accepts responsibility for his actions and takes his duties as a cooperating witness seriously.”
Defense attorneys have speculated that since Bankman-Fried’s close associates have pleaded guilty to criminal charges and cooperated with investigators, she had no choice but to follow suit.
The criminal charges were combined with civil charges from the US Securities and Exchange Commission (SEC), accusing Ellison and Wang and Bankman-Fried of violating securities related to the group’s domestic “FTT” cryptocurrency.
As stated therein The SEC’s complaint, between 2019 and 2022, Ellison, “at the direction of Bankman-Fried,” developed the program by manipulating the price of FTT, the exchange crypto-security token issued by FTX, by making large purchases to inflate its price on the open market. FTT pledged its clients’ properties to Alameda, owned by Wang and Bankman-Fried, as collateral for undisclosed loans by FTX.
The complaint underscores the picture painted by several investigations of tight ties between Alameda and FTX, which have no outside investors. The two companies shared bank accounts and key personnel, pooled funds, and both were under Banker-Fried’s direct control, despite Ellison’s nominal authority, according to the complaint.
FTX secretly promoted Alameda, an “unlimited ‘line of credit’ funded by platform clients,” the SEC says, despite assuring investors and depositors that “sophisticated automated risk measures” would prevent any individual trades from losing client funds. When the unlimited line of credit paid off Alameda’s bets, it made a profit. , but when they failed, it was FTX customers who ultimately lost.
Wang created FTX’s software code that allowed Alameda to divert FTX customer funds, and Ellison used the misappropriated FTX customer funds for Alameda’s trading activities. Bankman-Fried previously denied allegations of a secret “backdoor” in FTX’s software. Referring to He “doesn’t even know how to code”.
If the SEC’s complaint is upheld in court, it could have ramifications for the crypto-industry beyond FTX. As part of its legal case, the SEC argued that the FTT created by FTX was “offered and sold as an investment contract, and therefore a security,” with the promise that shareholders would share in the company’s profits.
“Publicly available information allowed FTT holders to share in FTX’s growth and future earnings, as well as a fair share of the value of FTT,” the SEC says, arguing that the cryptocurrency thus violated US laws in issuing unlicensed securities. If the argument is accepted in court, it could have a significant impact on other cryptocurrencies, which thrive on regulatory uncertainty surrounding their legal status.
A separate civil suit accused Bankman-Fried of illegally using investors’ money to fund Alameda research and buy property for herself and her family.
Williams described FTX’s collapse as “The largest financial fraud in US history”, adding that the investigation is ongoing and has again called on former employees of FTX to come forward.
