Business partners turn to Sam Bankman-Fried

New York

The stunning collapse of one of crypto’s most prominent companies has quickly turned into a legal battle pitting former executives and ex-romantic partners against each other.

Last week, as FTX founder Sam Bankman-Fried was being extradited to the United States from the Bahamas, two of his former business partners pleaded guilty to multiple counts of fraud and conspiracy.

Caroline Ellison, the 28-year-old former CEO of crypto hedge fund Alameda, apologized before a federal judge in New York, saying she and her former partners deliberately stole billions of dollars from clients of Bankman-Fried’s FTX exchange and tried to hedge it, according to multiple news reports citing court transcripts.

“I’m very sorry for what I did,” Ellison told the court. “I knew it was wrong.”

Ellison has been charged with seven criminal counts, including conspiracy to commit wire fraud and money laundering. She and Bankman-Fried were close business partners who dated briefly.

Another associate, Gary Wang, FTX’s former chief technology officer, pleaded guilty to four similar charges.

Both Ellison and Wang are cooperating with federal prosecutors, turning them into potentially damning witnesses against Bankman-Fried, which has repeatedly denied intentionally defrauding clients and investors.

Bankman-Fried, 30, appeared in a US courtroom in New York on Thursday, where a federal judge released him on $250 million bail. He must surrender his passport and remain under house arrest at his parents’ home in Palo Alto, California.

Although $250 million is an extraordinary sum, Bankman-Fried will not have to pay it unless he violates the terms of his bail agreement or fails to appear in court. The unusual bail plan was agreed to as part of his pledge to give up his extradition fight.

After his court appearance, Bankman-Fried was spotted in a business class lounge at John F. Kennedy International Airport in New York. Crypto journalist Tiffany Fong also tweeted a photo showing Bankman-Fried on an American Airlines flight.

Bankman-Fried’s legal team confirmed to CNN Business that she had arrived in Palo Alto and was at home with her parents. Their attorney declined to comment on Ellison and Wang’s guilty pleas.

The federal judge said Thursday that Bankman-Fried would be tried on eight criminal charges, including fraud and conspiracy, at an unspecified future date.

Prosecutors allege that Bankman-Fried orchestrated “one of the largest financial frauds in American history,” stealing billions of dollars from FTX customers to cover losses in Alameda and enrich himself. If convicted, he could face life in prison.

Bankman-Fried, before his arrest in the Bahamas earlier this month, had tried to portray himself as a down-on-his-luck entrepreneur who fell off his skis. He repeatedly apologized to FTX customers and staff, saying that he “f-ed up”, while denying that he had knowingly deceived anyone.

— CNN’s Kara Scannell contributed to the report.

Leave a Reply

Your email address will not be published. Required fields are marked *