On Dec. 21, 2022, members of U.S. law enforcement detailed that FTX co-founder Gary Wang and ex-Alameda Research CEO have pleaded guilty to financial fraud charges. The recent charges against Wang and Ellison highlight some key findings and according to the U.S. Securities and Exchange Commission (SEC), FTX’s exchange token FTT is considered a security.
SEC Complaint Says SBF ‘Directed’ and ‘Instructed’ High-up Execs Like Caroline Ellison to Commit Fraud
U.S. attorney Damian Williams told the public on Wednesday that charges have been filed against Caroline Ellison, the former CEO of Alameda Research, and Zixiao (Gary) Wang, the former Chief Technology Officer of FTX Trading Ltd. The Southern District of New York (SDNY) also told the press that Ellison and Wang were cooperating with federal law enforcement and the recent SEC charges identify key findings that were previously speculated on or were unknown at the time.
The first glaring evidence shows that the FTX co-founder Sam Bankman-Fried (SBF) said a lot of untruthful things during his recent media tour. The SEC charges show that lied during those interviews about specifics and the SEC accuses Bankman-Fried and Wang of “improperly [diverting] customer assets to Alameda Research LLC and its subsidiaries.” Moreover, the speculation and rumors that said SBF and Wang built a backdoor into FTX for Alameda are also reportedly true, according to the SEC’s accusations.
The SEC complaint says SBF, Wang, and Ellison “had provided Alameda with significant special treatment on the FTX platform, including a virtually unlimited ‘line of credit’ funded by the platform’s customers.” The U.S. regulator further says that Ellison, “acting at the direction of Bankman-Fried,” manipulated the FTX exchange token FTT’s price. The move was meant to increase the price of FTT in order to “inflate the value of Alameda’s collateral.”
The SEC also alleges that SBF was the sole decision maker at Alameda Research. “Bankman-Fried remained the ultimate decision-maker at Alameda, even after Ellison and Trabucco became co-CEOs in or around October 2021,” the SEC’s court filing details. The SEC’s accusations further state:
Most crucially, Bankman-Fried used…
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