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The trio of longtime friends were among key members of an inner circle of associates who ran Bankman-Fried's crypto empire, which included cryptocurrency exchanges FTX and Alameda Research, the company private trading. All three had lived with other senior executives in a luxury apartment in Nassau's Albany complex.
Ellison pleaded guilty to seven counts, including wire fraud and conspiracy to commit securities fraud and money laundering, which carry a maximum sentence of 110 years in prison, while that Wang pleaded guilty to four counts of fraud and conspiracy to commit fraud, with a maximum sentence of 50 years, according to signed agreements seen by the Financial Times.
The documents said prosecutors would not oppose bail applications for the two defendants under certain conditions, including posting bail and surrendering their travel documents, pending sentencing official.
Separately, the Securities and Exchange Commission and the Commodity Futures Trading Commission have filed civil lawsuits against Ellison, 28, and Wang, 29, accusing them of fraud.
As managing director of FTX's trading subsidiary, Ellison "used FTX client assets to pay Alameda's debts" and diverted billions of dollars of depositors' money to the company to fill a hole caused by a crypto market crash in May, according to the SEC. the complaint alleges.
The CFTC said Wang had a hand in creating some of the algorithms that underpin FTX, which allowed Alameda to "maintain an essentially unlimited line of credit" on the exchange, giving it an "unfair advantage "compared to regular depositors.
“These critical code features and structural exceptions allowed Alameda to covertly and recklessly siphon FTX customer assets from the FTX platform,” the CFTC added.
Both defendants were cooperating with the SEC, the agency said. The CFTC said it does not dispute liability.
A lawyer for Wang, Ilan Graff, said, "Gary has accepted responsibility for his actions and takes his obligations as a cooperating witness seriously." Ellison's attorneys did not immediately respond to requests for comment.
Alameda, the trading company launched in 2017, played a key role in the events that led to the collapse of FTX and the allegations against its senior executives.
Bankman-Fried, Wang, and Ellison were among the first employees of the trading company. Over time, the company has moved from relatively safe arbitrage strategies to increasingly risky bets on crypto tokens and companies, funded in part with borrowed money.
After the launch of FTX, Bankman-Fried and Wang officially stepped down from their roles at Alameda to avoid a conflict of interest between the companies. US authorities say they have remained closely linked to Alameda.
The SEC claims that Ellison and Bankman-Fried “conspired to manipulate the price of FTT,” a crypto token issued by FTX. Alameda had taken on large debt backed by FTT, so a crash in the price of the token threatened to wipe out the trading firm.
SEC Chairman Gary Gensler said artificially supporting the price serves to “reinforce the value of their house of cards.”
Last week, the US Department of Justice filed a lawsuit against Bankman-Fried and accused him of orchestrating "one of the biggest financial frauds in American history...
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