Sam Bankman-Fried, founder and former CEO of crypto currency exchange FTX, is walked in handcuffs to a plane during his extradition to the United States in Nassau, Bahamas Dec. 21, 2022. |
FTX founder Sam Bankman-Fried left the Bahamas on Wednesday on a US-bound flight to face fraud charges as federal prosecutors announced that two of his former associates had pleaded guilty to charges and were now cooperating with the government.
Manhattan US Attorney Damian Williams said in a video posted
on Twitter late Wednesday night that Caroline Ellison, former CEO of Alameda
Research, and Gary Wang, co-founder of FTX, had pleaded guilty to defrauding
investors in the crypto trading platform.
The revelation that two of Bankman-Fried's closest former
associates had decided to cooperate with the government significantly ramped up
pressure on the former billionaire.
Williams said that Bankman-Fried is now in FBI custody and
on his way to the U.S and urged others involved in the alleged fraud to come
forward.
"If you participated in misconduct at FTX or Alameda,
now is the time to get ahead of it," William said. "We are moving
quickly and our patience is not eternal."
"I also said that last week's announcement would not be
our last, and let me be clear once again, neither is today's," he added.
The US Securities and Exchange Commission (SEC) in a
separate statement on Wednesday evening said it had also charged Ellison and
Wang for their roles in a multiyear scheme to defraud equity investors of FTX.
The US Commodity Futures Trading Commission also said it had
filed fraud charges against Ellison and Wang.
An attorney for Ellison did not respond immediately to
request for comment.
"Gary has accepted responsibility for his actions and
takes seriously his obligations as a cooperating witness," Ilan Graff, a
lawyer for Wang, said in a statement.
Federal prosecutors in Manhattan last week charged
Bankman-Fried with stealing billions of dollars in FTX customer assets to plug
losses at his hedge fund, Alameda Research, in what US Attorney Williams called
"one of the biggest financial frauds in American history."
The 30-year-old cryptocurrency mogul has acknowledged
risk-management failures at FTX, but has said he does not believe he has
criminal liability.
A spokesman for Bankman-Fried's legal team declined to
comment.
Bankman-Fried rode a crypto boom to become a billionaire
several times over and an influential US political donor, before FTX's crash
wiped out his wealth and tarnished his reputation. The collapse was driven by a
wave of customer withdrawals amid concerns over commingling of funds with
Alameda.
The announcement from Williams and the SEC came just hours
after Bankman-Fried took off from The Bahamas after he consented at a
courthouse to be extradited to the United States.
Bankman-Fried is likely to appear before a US federal court
in Manhattan on Thursday. At his court appearance, known as an arraignment, he
is expected to be asked to enter a plea. The US judge would determine whether
to grant him bail, and if so, on what conditions.
He is expected to be arraigned on the eight counts he faces,
including wire fraud, money laundering, and campaign finance violations.
Bankman-Fried was arrested on a US extradition request last
week in The Bahamas, where he lives and where FTX is based. He initially said
he would contest extradition, but Reuters and other outlets reported over the
weekend that he would reverse that decision.
He agreed to extradition in part out of a "desire to
make the relevant customers whole," according to an affidavit read in
court on Wednesday and dated Dec. 20.
Dressed in a suit, Bankman-Fried stepped up to the witness
box in court, where he spoke clearly and steadily as he was sworn in.
"Yes, I do wish to waive my right to such formal
extradition proceedings," he told Judge Shaka Serville.
Bankman-Fried's defense lawyer, Jerone Roberts, said his
client was "anxious to leave."
The judge said he was satisfied that and that Bankman-Fried
had not been "forced, coerced or threatened" into making the
extradition decision.
The $32 billion exchange declared bankruptcy on Nov. 11, and
Bankman-Fried stepped down as CEO the same day.
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