Casey Wagner

Two former FTX executives who pleaded guilty and cooperated with the government will be sentenced in New York in the fall.&nbsp;



Former Director of Engineering Nishad Singh and former Chief Technology Officer Gary Wang will be sentenced on Oct. 30, 2024 and Nov. 20, 2024, respectively.&nbsp;



Singh, an old high school classmate of FTX founder Sam Bankman-Fried, pleaded guilty to four federal counts in February 2023. He testified at Bankman-Fried’s trial that hedge fund Alameda Research took billions of dollars from FTX, at Bankman-Fried’s direction.&nbsp;



“I’ve always been intimidated [of Bankman-Fried],” Singh said during the November trial. “Sam’s a formidable character… I think over time a lot of that eroded.”&nbsp;



Wang, who pleaded guilty to four federal counts of fraud and conspiracy in December 2022, also helped paint an <a href="https://blockworks.co/news/sam-bankman-fried-gary-wang">incriminating picture of Bankman-Fried</a> to the jury. Wang created special advantages for Alameda Research that were not available to other FTX customers, allowing the hedge fund to place orders faster. These privileges ultimately resulted in the $8 billion hole Alameda owed the FTX exchange by the time the company collapsed in the fall of 2022.&nbsp;



The scheduling update comes roughly six weeks after Ryan Salame, another one of Bankman-Fried’s former associates, was <a href="https://blockworks.co/news/former-ftx-exec-ryan-salame-sentenced">sentenced to 7.5 years in prison</a>. Salame in September 2023 pleaded guilty to two federal counts of campaign finance violations and operating an unlicensed money-transmitting business.&nbsp;



<a href="https://blockworks.co/tag/ryan-salame">Salame</a>, the first among Bankman-Fried’s former associates to be sentenced, is the only one of the four former <a href="https://blockworks.co/tag/ftx">FTX</a> executives who pleaded guilty that did not testify against Bankman-Fried during his trial last fall.&nbsp;



Federal Judge Lewis Kaplan, who oversaw Bankman-Fried’s trial and will sentence all other parties, opted to hand down a punishment just above the government’s recommendation for Salame, which was five to seven years in prison.&nbsp;



Salame’s minimal cooperation, the prosecution said in their <a href="https://blockworks.co/news/former-ftx-exec-ryan-salame-sentencing">sentencing memo</a> in May, meant his contributions to the case against Bankman-Fried were “relatively minor.”&nbsp;



Given Nishad and Wang’s cooperation as witnesses, and the fact that they both pleaded guilty months before Salame, should result in more lenient sentences, although both could face decades.&nbsp;



Caroline Ellison, former CEO of Alameda Research and fellow government witness, has not yet had her sentencing date scheduled. Ellison pleaded guilty to seven federal counts which carry a maximum sentence of 110 years in prison.



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Caroline Ellison

Former FTX execs, government witnesses to be sentenced this fall

Katherine Ross

A Wired report revealed new details about the November 2022 FTX hack, which happened hours after the now-defunct exchange filed for bankruptcy.



The report alleges that a Ledger Nano personally owned by Kumanan Ramanathan — an advisor to FTX from Alvarez &amp; Marsal — was used to hold roughly $400 to $500 million as FTX employees desperately tried to protect funds still held on the exchange.&nbsp;



FTX co-founder Gary Wang transferred the assets as they waited to hear back from BitGo on cold storage wallets, a solution that had been apparently devised by LedgerX’s Zach Dexter.&nbsp;



The $400 to $500 million allegedly held in Ramanathan’s wallet was transferred on the morning of Nov. 12 to <a href="https://blockworks.co/tag/bitgo">BitGo</a>, which would later hold around a billion dollars worth of FTX funds — or what was left, anyway.



<a href="https://blockworks.co/tag/ftx">FTX</a> staffers allegedly spent the night of Nov. 11 tracking wallets containing FTX crypto to transfer everything they could find to BitGo’s cold wallets. There was confusion around where private keys were held, helping to create “chaos,” the <a href="https://www.wired.com/story/ftx-1-billion-crypto-heist/">report</a> said.



The former exchange used multisig wallets to protect its assets, meaning it required multiple signatures to transfer crypto assets from the wallet.



“In the few instances in which the FTX Group even attempted to employ these controls, it misapplied them: For each wallet, the FTX Group stored together, in one place, all three private keys required to authorize a transfer such that any individual who had access to one had access to all the keys required to transfer the contents of the wallet, thus defeating the purpose of the controls,” FTX CEO John J. Ray wrote in an April court filing.&nbsp;



The 45-page document laid out the “control failures at the FTX exchange.”



“While crypto exchanges are notoriously targeted by hackers, the FTX Group had poor or, in some cases, no “visibility” controls to detect and respond to cybersecurity threats,” Ray continued.



When the FTX hack took place, <a href="https://blockworks.co/news/what-happened-ftx-hack">there was confusion around whether or not</a> the bankrupt crypto firm had actually been hacked.&nbsp;



However, it later became clear that roughly $500 million in digital assets from both the international and the US exchanges were stolen.



Since the attack, the wallet addresses involved were mostly dormant until last week, when the hacker began using ThorSwap, a cross-blockchain liquidity protocol, to exchange ether for bitcoin.



Blockworks <a href="https://blockworks.co/news/ftx-hacker-ether-bticoin-liquidity">reported that the attacker’s move is strange</a> due to the chain’s trackable nature. Data editor Andrew Thurman wrote that many hackers use privacy services like <a href="https://blockworks.co/tag/tornado-cash">Tornado Cash</a>, or cross-chain bridges — which inadvertently act as mixers — to hide their on-chain trail.



<a href="https://blockworks.co/news/ftx-hack-upon-bankruptcy-finally-attracts-us-feds">Blockworks reported</a> in December 2022 that Elliptic flagged $663 million worth of crypto on the move, though $180 million of that figure ended up being FTX sending funds to cold storage.&nbsp;



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New report shows ‘chaos’ during FTX hack last November: Wired

James Cirrone

Molly Jane Zuckerman

“FTX was not fine. Assets were not fine.”



That’s from Gary Wang, the former co-founder and chief technology officer who returned to the stand on Friday for the trial against Sam Bankman-Fried.&nbsp;



FTX’s collapse last November was, in part, publicized by former CEO <a href="https://blockworks.co/tag/sam-bankman-fried">Bankman-Fried</a>’s own tweets. One of his most infamous — and since deleted —&nbsp;messages was issued less than a week before FTX declared bankruptcy. The message: “FTX is fine. Assets are fine.”&nbsp;



Wang told the court today that the substance of the tweet was false. An $8 billion hole existed at the heart of <a href="https://blockworks.co/tag/ftx">FTX</a>’s balance sheet, with sister company <a href="https://blockworks.co/tag/alameda-research">Alameda Research</a> on the hook for the loan. Bankman-Fried, according to Wang, was well aware of this debt when he tweeted.&nbsp;



Wang further testified that some customer assets were also simply “lost” while other funds were spent on investments.&nbsp;



Read more: <a href="https://blockworks.co/news/sam-bankman-fried-gary-wang">Co-founder Wang says FTX code allowed Alameda’s ‘unlimited withdrawals’</a>



The prosecution sought to use <a href="https://blockworks.co/tag/gary-wang">Wang</a>’s testimony to demonstrate that many of Bankman-Fried’s public statements about the solvency of FTX, as well as risk exposure since the exchange launched, were lies. A clip of a Bloomberg podcast hosted by Matt Levine depicted Bankman-Fried bragging about FTX’s lack of exposure to liquidations — specifically, that FTX never had a day with blowouts greater than its revenue.&nbsp;



That wasn’t true, according to Wang. He alleged that on days when a loss for FTX might have occurred, that loss was shifted over to Alameda at Sam’s request.



<h2 class="wp-block-heading">Enter the Bahamian regulators&nbsp;</h2>



After FTX declared bankruptcy on Nov. 11, Wang stayed in <a href="https://blockworks.co/tag/the-bahamas">the Bahamas</a> with Bankman-Fried, according to his testimony.&nbsp;



During drives to and from the offices of the Bahamas Securities Commission on Nov. 12 — one day after the bankruptcy filing — Wang said Bankman-Fried told him to stall any transfers of assets to the US.



Instead, Bankman-Fried told Wang that they should send the assets to the Bahamian regulators because they appeared more “friendly.” Bankman-Fried got that impression, according to Wang, after meeting with them alongside his father, Joseph Bankman, and their lawyers.



Wang told the court that he ignored the advice of the US bankruptcy lawyer and followed Bankman-Fried’s orders — he transferred the FTX assets to Bahamian liquidators later that same day.



However, Wang then left Bankman-Fried in the Bahamas on Nov. 16. He later met with US officials on Nov. 17 to cooperate in the prosecution’s case against Bankman-Fried.&nbsp;



Wang told the court that he has no expectations that the government will reduce his sentence in light of his cooperation, but said that he hopes to avoid prison. Wang faces a maximum sentence of 50 years.



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FTX co-founder: ‘FTX was not fine. Assets were not fine.’

$100 million — that’s how far in the red Alameda Research’s FTX account went thanks to its so-called “special privileges” on the exchange, according to co-founder Gary Wang, now a testifying witness in the trial of former CEO Sam Bankman-Fried.



Day four of the <a href="https://blockworks.co/tag/sam-bankman-fried">Bankman-Fried</a> criminal trial, where he faces seven counts of fraud and conspiracy, started with Wang taking the stand again after the prosecution began their questioning on Thursday.&nbsp;



<a href="https://blockworks.co/tag/gary-wang">Wang</a>, who pleaded guilty in December 2022 to four counts, testified that Alameda Research’s FTX account was granted secret permission to “allow negative,” meaning it could trade even with no balance.&nbsp;



Read more: <a href="https://blockworks.co/news/sam-bankman-fried-trial-day-4">Sam Bankman-Fried trial live updates: FTX backstop fund was ‘fake,’ Wang testifies</a>



This was going on as early as late 2019, at Bankman-Fried and Nishad Singh’s request, Wang added. Singh, who also pleaded guilty, was <a href="https://blockworks.co/tag/ftx">FTX</a>’s director of engineering.&nbsp;



In 2020, Wang discovered in the database that <a href="https://blockworks.co/tag/alameda-research">Alameda</a>’s trading account balance was in the red more than FTX’s revenue, he told the jury, which was around $150 million. Alameda’s account balance was about negative $200 million, or more, Wang testified.&nbsp;



Alameda’s line of credit was $65 billion, Wang added, also noting that “maybe a dozen” others had credit lines over $1 million and no one else was in the billion-dollar range.&nbsp;



Bankman-Fried, who once again appeared in court wearing a suit and seated between attorneys, was fidgeting throughout the testimony. He was also observed using a computer, which he has been allowed to use since jury selection began on Tuesday.



Friday’s testimony is expected to wrap at around 3 pm ET, Southern District of New York senior judge Lewis Kaplan confirmed with prosecution earlier in the week. Court will recess for the weekend and resume on Oct. 10. The trial is expected to last six weeks.



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Alameda Research

Alameda was spending more trading than FTX was making in revenue: Co-founder

FTX co-founder Sam Bankman-Fried faces seven federal charges in a criminal trial taking place in Manhattan. The former crypto exchange exec is accused of misappropriating billions of dollars of customer funds for real estate, donations, political contributions and investments.&nbsp;



The current state of play: Both the prosecution and the defense made their <a href="https://blockworks.co/news/sam-bankman-fried-opening-statements">opening statements</a>, and the court heard testimony about SBF’s paddle tennis meeting and the ‘special privileges’ granted to the FTX’s closely-linked fund, Alameda Research.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



<h2 class="wp-block-heading">3:35 pm ET: And that’s a wrap… on week one</h2>



Gary Wang stayed on the stand to close out Friday, which saw Judge Lewis Kaplan grow visibly irritated with the defense at the end of the day.&nbsp;



Thankfully, court wrapped a little early, so maybe a fresh start can be made on Tuesday.&nbsp;



Oh, and about Tuesday: changes are already being made.&nbsp;



Caroline Ellison is expected to take the stand once Wang’s cross-examination is complete. It looks like both the testimony of BlockFi’s Zac Prince and Elan Dekel was pushed. It’s unclear, at this point, when or if the prosecution will call them as witnesses.&nbsp;



Anyway, back to Gary.&nbsp;



We’ve now heard that Alameda, according to testimonies from Wang and Yedidia, was deep in the financial hole. Deep, as in Alameda Research had an $11 billion fiat liability to FTX and had the ability to withdraw unlimited funds thanks to Wang, Bankman-Fried and Singh.



After the $11 billion hole was uncovered in June 2022, Wang and SBF met (sounds like this meeting was not, sadly, held on a paddle-tennis court) and Bankman-Fried wanted to have Alameda return the money it borrowed to lenders — specifically mentioning Genesis.



The money that would be used to pay back the lenders? According to Wang, those funds would’ve had to come from FTX customer assets.



Fast forward to September — just a couple months before FTX’s collapse — when Bankman-Fried seeks to shut down Alameda ahead of a Bloomberg article that would prove Alameda and FTX were deeply interconnected.&nbsp;



Alameda also operated as a market maker for FTX, but to skirt that, Bankman-Fried debated turning to another ex-girlfriend, Xiaoyun Zhang, who operated a crypto-trading firm with Duncan Rhenigans-Yoo.&nbsp;



SBF, who held a 16% stake in the firm called Modulo, floated that firm as a possible market maker replacement for Alameda. Both Zhang and Rhenigans-Yoo are ex-Jane Street employees, as is Bankman-Fried.



Wang testified that he learned from former Alameda CEO Ellison that Alameda borrowed $14 billion from FTX, meaning it couldn’t be shut down.&nbsp;



Now, let’s move to November 2022.&nbsp;



On Nov. 7, Bankman-Fried infamously tweeted (back when it was called Twitter, not X) that “FTX is fine. Assets are fine.”



<a href="https://blockworks.co/news/gary-wang-ftx-not-fine">Those assets, Wang testified Friday, were not fine</a>. A few days later, FTX sought protection from the courts.



Wang said he and Bankman-Fried traveled to the offices of the Bahamas Securities Commission. During the drive, Bankman-Fried asked Wang to transfer the FTX assets to the Bahamian liquidators. Wang testified that the Bahamian regulators would be more deferential than, say, the Americans.&nbsp;



Days later, Wang was back in the US and meeting with US officials.&nbsp;



Molly Jane Zuckerman contributed to reporting.



<h2 class="wp-block-heading">2:00 pm ET: From the courtroom floor</h2>



Don’t forget to tune into the <a href="https://www.youtube.com/watch?v=_TbBNoBvRCA">latest episode</a> of Empire to hear senior reporter Casey Wagner spill the tea on the courtroom drama. Here’s some of our favorite highlights:&nbsp;



While Casey has to wake up at four in the morning to snag a seat in the gallery, one juror with a front row seat has been taking a nap this week.&nbsp;



They were <a href="https://blockworks.co/news/sam-bankman-fried-trial-sleeping-juror">seen dozing off on Wednesday and Thursday</a> as the prosecution got into the nitty gritty of futures trading and wire deposits. In the juror’s defense, it was pretty dry.&nbsp;



Judge Kaplan tells the defense they are on thin ice.&nbsp;



After a particularly painful cross-examination Thursday (during which Sam’s mother Barbara Fried was seen with her head bowed and hands over her face), Kaplan told SBF attorney Christian Everdell he was “wearing out [his] welcome on repetition.”&nbsp;



SBF’s latest defense strategy: He drove a Toyota Corolla.&nbsp;



Sam’s attorney, in an apparent effort to prove the FTX founder did not spend frivolously, pressed witness Adam Yedidia, former friend and employee at FTX, on what kind of car Sam drove. When Adam said he did not recall, Everdell asked if he had ever seen a Toyota Corolla around.&nbsp;



“I don’t think there’s anyone in the room who hasn’t seen one, so let’s get on with it,” Kaplan interjected.



<h2 class="wp-block-heading">12:27 pm ET:&nbsp;&#8220;Fake&#8221; numbers and Alameda privileges</h2>



We have your lunch break covered — for court updates, anyway.



Wang’s testimony continues, revealing that — back in 2019 — <a href="https://blockworks.co/tag/sam-bankman-fried">Bankman-Fried</a> responded to a tweet alleging &#8220;Alameda is a liquidity provider on FTX but their account is just like everyone else&#8217;s.&#8221;&nbsp;



Meanwhile, at the <a href="https://blockworks.co/tag/ftx">FTX</a> offices on the same day — July 31, 2019 — Alameda was granted the negative balance feature, meaning it could withdraw funds even if the balance was, well, negative.



Oh, and <a href="https://blockworks.co/tag/gary-wang">Wang</a> reiterated that SBF specifically asked for the coding that enabled the negative feature.



The accounts with access to this feature included two <a href="https://blockworks.co/tag/alameda-research">Alameda</a> accounts, the FTT sub-account, and two more bookkeeping accounts. In other words, Alameda was the only one with access to these special privileges.



SBF, according to Wang, “never” wanted Alameda’s account liquidated.



And that backstop or insurance fund that FTX once advertised? The numbers were “fake,” according to Wang. There wasn’t $5 million available or 5.25 million <a href="https://blockworks.co/price/ftt">FTT</a>. The amounts in those accounts were “lower,” he explained.



The backstop funds didn’t always have enough to cover large losses on the FTX platform, so that they wouldn’t impact the average Joe.&nbsp;



The testimony echoes <a href="https://blockworks.co/news/sam-bankman-fried-gary-wang">threads of what Wang told the court yesterday</a>. Namely, that Alameda had a line of credit from FTX in the billions — “with a B,” he clarified just in case.



<h2 class="wp-block-heading">11:00 am ET: Up next in the Sam Bankman-Fried trial we have…</h2>



When the prosecution finishes with Wang, the defense will have the opportunity to cross-examine. Then, it’s back to the government for final questions and next witnesses.&nbsp;



Taking the stand: Zac Prince, founder and CEO of BlockFi, and Elan Dekel, vice president of product at Pinecone. The latter is a management system company that works with startups, according to <a href="https://www.linkedin.com/in/elandekel/">LinkedIn</a>.&nbsp;



Judge Kaplan noted earlier this week that Friday’s court session will finish early, likely around 3 pm ET. If both sides can’t get through Prince and Dekel by the end of today, they will resume questioning on Tuesday. (Monday is a court holiday.)



Prince is scheduled to go first. Here’s what you need to know about Prince, BlockFi and the relationships to FTX and Alameda:



BlockFi <a href="https://blockworks.co/news/blockfi-bankruptcy-chapter-11-greenlight#:~:text=BlockFi's%20Chapter%2011%20plan%20received,following%20the%20collapse%20of%20FTX.">declared bankruptcy</a> in late November 2022, weeks after FTX fell apart. Back in July, a committee of unsecured BlockFi creditors <a href="https://blockworks.co/news/blockfi-creditor-report">released a 92-page investigation</a> into the firm’s collapse. The report detailed not only the relationship between the former lender and crypto hedge fund but also that the risk management team warned Prince of potential risks related to the Alameda loans.



A 2021 memo from BlockFi’s credit risk team cautioned that Alameda had “wrong-way risk, had unaudited financials, relied on illiquid tokens, and was offering volatile collateral.”&nbsp;



According to the report, former Chief Risk Officer Rene van Kesteren was “uncomfortable with the risk profile presented by additional FTT as collateral.”&nbsp;



However, Prince reportedly “expressed interest” in doing more business with Alameda. Per the report, he even “pushed to increase exposure to (and revenue from) Alameda by allowing Alameda to use FTT as collateral, despite concerns from the risk management team regarding its illiquidity.”



What do we know about Dekel? If we’re being honest, not much.&nbsp;



While LinkedIn gives an idea of what Dekel does, it’s not immediately clear why the prosecution wants him on the stand. His name was mentioned in the list given earlier this week by the prosecution of names who may be called to the stand or just mentioned throughout the trial.



It’s unclear, however, when the witnesses will be called to the stand. It all depends on how long the prosecution takes to finish questioning and how long Bankman-Fried’s team will conduct their cross-examination.&nbsp;



Yesterday, defense team attorney Christian Everdell spent about an hour and ten minutes on his cross-examination of Yedidia.&nbsp;



The prosecution told the judge that “we just need to reassess whether [Prince and Dekel] will be Tuesday witnesses or whether, given the fact that we&#8217;re now into the next week, we need to make a change.”



<h2 class="wp-block-heading">9:30 am ET: Gary Wang round two</h2>



FTX co-founder Gary Wang is back on the stand today to follow up on his <a href="https://blockworks.co/news/sam-bankman-fried-gary-wang">bombshell testimony from yesterday</a>.



<a href="https://blockworks.co/news/sam-bankman-fried-trial-day-3">ICYMI</a>: Wang told the court that he had committed a litany of crimes alongside Bankman-Fried, former Alameda CEO (and romantic partner) Caroline Ellison, and FTX’s former director of engineering Nishad Singh.&nbsp;



Wang also informed the court that Alameda was granted “special privileges,” at SBF’s direction.&nbsp;



While Wang had an equity stake in FTX and co-owned Alameda, he said that when there were disagreements, “in the end, it was Sam’s decision to make.”



Wang is scheduled for cross-examination later this morning, during which the defense will have the opportunity to question him. So far, only prosecutors have asked Wang questions.&nbsp;



Two other witnesses testified yesterday, Paradigm’s Matt Huang, and former SBF roommate and FTX employee, Adam Yedidia.&nbsp;



Of the three testimonies yesterday, Huang&#8217;s didn&#8217;t present any shocking revelations. He told the court that he tried to push for a governance model for FTX. However, Bankman-Fried seemed &#8220;resistant&#8221; to grant investors a board seat. While SBF did mention to Huang that a board of directors was a potential future consideration, such a plan never came to fruition.



Yedidia, who initially took the stand on Wednesday, was back on Thursday to finish both his testimony and cross-examination. The latter part, as Blockworks reported yesterday, saw sleepy jurors, a lot of objections and a judge’s warning.&nbsp;



There were some interesting soundbites, however, with <a href="https://blockworks.co/news/sam-bankman-fried-ftx-not-bulletproof">Yedidia recounting a meeting he had with SBF in June 2022</a>. Bankman-Fried, at a paddle tennis court (what a great meeting spot), told Yedidia that FTX was “bulletproof last year” but not “bulletproof” in 2022, and expected that it could take six months to three years to become “bulletproof” again.&nbsp;



Narrator’s voice: FTX fell roughly five months later.



Following the conversation, SBF reportedly became “worried or nervous.”



This is a developing story.



Blockworks reporters&nbsp;<a href="https://twitter.com/caseywagnerr" target="_blank" rel="noreferrer noopener">Casey Wagner</a>&nbsp;and&nbsp;<a href="https://twitter.com/JamesCirrone" target="_blank" rel="noreferrer noopener">James Cirrone</a>&nbsp;are covering Sam Bankman-Fried’s trial from the courtroom in New York. Follow for instant trial updates on their X accounts.



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Sam Bankman-Fried trial live updates: Caroline Ellison to testify next week

Bessie Liu

Former crypto billionaire Sam Bankman-Fried will face court over allegations including fraud and conspiracy in the first week of January, but he’ll be addressing a different judge.



Bankman-Fried’s case was initially assigned to 54-year-old district judge Ronnie Abrams. However, Abrams <a href="https://www.innercitypress.com/sdny10cryptoftxsbficp122722.html" target="_blank" rel="noreferrer noopener">recused</a> herself on Friday due to her husband&#8217;s partner role at law firm Davis Polk and Wardwell, which had advised Bankman-Fried’s FTX last year.



Replacing Abrams is Lewis Kaplan, who at 78 has garnered a “no-nonsense” reputation, per <a href="https://www.theguardian.com/business/2022/dec/27/judge-trump-prince-andrew-trials-sbf-sam-bankman-fried-ftx-cryptocurrency" target="_blank" rel="noreferrer noopener">The Guardian</a>. Kaplan was nominated by President Bill Clinton in 1994 and has overseen high profile cases involving Donald Trump, Britain&#8217;s Prince Andrew and Kevin Spacey.



Kaplan is also familiar with crypto fraud. He&#8217;s credited with <a href="https://www.justice.gov/usao-sdny/pr/texas-man-sentenced-operating-bitcoin-ponzi-scheme" target="_blank" rel="noreferrer noopener">sentencing</a> the first ever bitcoin-related federal securities fraud case in 2016, handing down 18 months&#8217; prison (and three years supervised release) to Bitcoin Savings &amp; Trust&#8217;s Trendon Shavers for running a Ponzi scheme.



As for Bankman-Fried, he denied fraud allegations to the media in the leadup to his arrest. He&#8217;s <a href="https://www.reuters.com/legal/sam-bankman-fried-enter-plea-ftx-fraud-case-2022-12-28/" target="_blank" rel="noreferrer noopener">expected</a> to lodge a plea before Kaplan next week. 



Ex-CEO of Alameda Research Caroline Ellison and former chief technology officer Gary Wang have already <a href="https://blockworks.co/news/ftx-alameda-execs-plead-guilty-to-fraud-released-on-bail" target="_blank" rel="noreferrer noopener">pleaded guilty</a> to criminal charges related to the exchange’s collapse.



Ellison pleaded guilty to seven charges including two counts of wire fraud, two counts of conspiracy to commit wire fraud, conspiracy to commit commodities fraud, securities fraud and money laundering, court documents show. She faces up to 110 years in prison.



Wang similarly pleaded guilty to four charges including conspiracy to commit securities fraud, commodities fraud and wire fraud. He faces up to 50 years in prison. Both executives have been released on <a href="https://blockworks.co/news/ftx-alameda-execs-plead-guilty-to-fraud-released-on-bail" target="_blank" rel="noreferrer noopener">$250,000</a> bond.



Bankman-Fried, on the other hand, is currently out on a <a href="https://blockworks.co/news/sbf-wont-actually-pay-250m-for-his-bail-bond" target="_blank" rel="noreferrer noopener">record $250 million bond</a> secured by his parents’ California home, where he’s under house arrest throughout the trial.



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SBF’s New Judge Already Sent One Crypto Fraudster to Prison

Shalini Nagarajan

Former Alameda Research CEO Caroline Ellison and FTX co-founder Gary Wang have pleaded guilty to federal criminal charges over their role in fraud which contributed to FTX&#8217;s implosion.



US attorney Damian Williams said Wednesday that the Southern District of New York had filed charges against the pair, with both cooperating with authorities.



Ellison collectively faces seven charges including wire fraud and conspiracy to commit both commodities and securities fraud. They carry a maximum sentence of 110 years in prison, according to a <a href="https://s3.documentcloud.org/documents/23495436/crypto-cooperator-ftx-alamedas-caroline-ellisons-plea-agreement-inner-city-press-on-the-case.pdf" target="_blank" rel="noreferrer noopener">plea agreement</a> with prosecutors.&nbsp;



Wang, who served as chief technology officer at both FTX and Alameda, pleaded guilty to four counts of conspiracy to commit wire fraud and securities fraud. He faces up to 50 years in prison, according to the <a href="https://www.washingtonpost.com/business/2022/12/21/caroline-ellison-fraud-charges/?outputType=amp" target="_blank" rel="noreferrer noopener">Washington Post</a>. They have both reportedly been released on a $250,000 bond.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">Statement of U.S. Attorney Damian Williams on U.S. v. Samuel Bankman-Fried, Caroline Ellison, and Gary Wang <a href="https://t.co/u1y4cs3Koz">pic.twitter.com/u1y4cs3Koz</a>&mdash; US Attorney SDNY (@SDNYnews) <a href="https://twitter.com/SDNYnews/status/1605745361842327552?ref_src=twsrc%5Etfw">December 22, 2022</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



The Securities and Exchange Commission published an <a href="https://www.sec.gov/news/press-release/2022-234" target="_blank" rel="noreferrer noopener">accompanying civil charge</a> against both former executives “for their roles in a multiyear scheme to defraud equity investors in FTX.”



Between 2019 and 2022, Ellison was directed by former FTX CEO Sam Bankman-Fried to manipulate the price of the exchange’s FTT token by making large purchases to boost its price, the SEC alleged.



This price manipulation caused Alameda’s FTT holdings to be inflated, in turn leading to misrepresentations of the firm’s balance sheet, it added.



Wang was accused of creating a <a href="https://blockworks.co/news/ftx-execs-user-funds-alameda" target="_blank" rel="noreferrer noopener">previously reported</a> backdoor in FTX’s software that enabled Alameda to divert the exchange’s customer funds. Ellison allegedly used these misappropriated funds for Alameda’s trading activity.



“When FTT and the rest of the house of cards collapsed, [Bankman-Fried, Ellison and Wang] left investors holding the bag,” SEC Chair Gary Gensler said in a statement.



<h3 class="wp-block-heading">Bankman-Fried closer to facing US court</h3>



The Commodity Futures and Trading Commission separately <a href="https://www.cftc.gov/PressRoom/SpeechesTestimony/mersingerstatement122122" target="_blank" rel="noreferrer noopener">updated its complaint</a> against Bankman-Fried to add both Ellison and Wang as defendants in “perpetrating an international fraudulent scheme” that led to FTX customer losses of $8 billion. 



It&#8217;s unclear whether FTX co-founder Bankman-Fried intends to lodge a guilty plea. Ilan Graff, Wang’s lawyer, told Blockworks in an emailed statement that his client “has accepted responsibility for his actions and takes seriously his obligations as a cooperating witness.”



Ellison’s legal representative didn’t return a request for comment by press time. A spokesperson for Sam Bankman-Fried declined to comment.&nbsp;



Bankman-Fried himself was charged and arrested in the Bahamas last week. He is currently in FBI custody, with reports indicating he was extradited to the US late Wednesday.



Updated Dec. 22, 2022 at 3:16 am ET: Clarified date of Bankman-Fried&#8217;s arrest.



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FTX, Alameda Execs Plead Guilty to Fraud, Released On Bail

Jacquelyn Melinek

<div id="highlights-block_621d2fa3456ea" class="highlights">
 <ul>
 <li>The fund will be a part of the FTX Foundation, a philanthropic organization funded primarily by FTX CEO Sam Bankman-Fried</li>
 <li>“We’re particularly keen to launch massively scalable projects: projects that could grow to productively spend tens or hundreds of millions of dollars per year,” the company said</li>
 </ul>
 
</div>



Cryptocurrency exchange FTX has launched its inaugural philanthropic fund in a bid to inject digital assets cash into charitable pursuits. 



The venture, Future Fund, will distribute at least $100 million — and perhaps as much as $1 billion — this year, “depending on how many outstanding opportunities we find,” the <a href="https://ftxfuturefund.org/announcing-the-future-fund/" target="_blank" rel="noreferrer noopener">company said</a> Monday. 



The fund falls under the umbrella of the FTX Foundation, a philanthropic organization funded primarily by <a href="https://cms.blockworks.co/ftx-valued-at-32-billion/">FTX</a> CEO Sam Bankman-Fried. It also counts major contributions from Alameda Research’s Co-CEO Caroline Ellison, FTX Co-founder and Chief Technology Officer Gary Wang, and FTX’s Head of Engineering Nishad Singh.



“There are billions of people alive today,” Bankman-Fried <a href="https://twitter.com/SBF_FTX/status/1498350635162509320?s=20&amp;t=AT_CBr91g6WG0feYMlMNQw" target="_blank" rel="noreferrer noopener">tweeted</a>. “There are trillions of people who could live great lives if we leave behind a better world to our children.”



The team compiled a list of <a href="https://ftxfuturefund.org/projects/" target="_blank" rel="noreferrer noopener">38 potential projects</a>, including artificial intelligence ethics, pathogen sterilization technology, alternative voting systems, a new university or publishing house and support for movies and documentaries. 



“We’re particularly keen to launch<a href="https://ftxfuturefund.org/massively-scalable-projects/" target="_blank" rel="noreferrer noopener"> massively scalable projects</a>: projects that could grow to productively spend tens or hundreds of millions of dollars per year,” the announcement said.



The move signifies the crypto exchange’s expansion beyond the digital asset world and into other real world industries. To date, FTX has set aside over <a href="https://ftx.com/foundation" target="_blank" rel="noreferrer noopener">$18 million</a> for charity — including $8.7 million of user contributions and $9.5 million from user fees.



The company says its corporate lines and employees have made more than $10 million of charitable donations overall.&nbsp;



Bankman-Fried, a 29-year-old worth $22.5 billion, last year donated $50 million and plans to donate $500 million next year, according to a video <a href="https://twitter.com/nasdaily/status/1486415344604491776?s=20&amp;t=GFZKOCt8tt3YIeGOpNSZDw" target="_blank" rel="noreferrer noopener">interview</a>.



“I wanted to get rich not because I liked money, but because I wanted to give that money to charity,” Bankman-Fried said in the interview.



Last week, the company <a href="https://twitter.com/SBF_FTX/status/1496980981617946624?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1496980981617946624%7Ctwgr%5E%7Ctwcon%5Es1_&amp;ref_url=https%3A%2F%2Fwww.wsj.com%2Flivecoverage%2Frussia-ukraine-latest-news%2Fcard%2Fcrypto-exchange-ftx-gives-cash-to-ukrainians-on-its-platform-0kpNhU6rX8Lusu6PgXxu" target="_blank" rel="noreferrer noopener">gave $25</a> to every Ukrainian registered on its platform after the country’s central bank temporarily suspended its currency market and limited withdrawals.



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Gary Wang

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