Crypto exchange FTX goes bankrupt: Two top managers plead guilty to fraud

Enlarge image

FTX logo at a sports arena in Miami: Investigators record successes

Photo: MARCO BELLO / REUTERS

There is movement in the investigations into the insolvent crypto exchange FTX: company founder Sam Bankman-Fried was flown from the Bahamas to the USA on Wednesday.

The 30-year-old had previously waived his right to contest the extradition.

Now the entrepreneur, who is suspected of fraud, is likely to face critical questions.

As the US Attorney's Office announced, two top managers of FTX pleaded guilty to fraud.

Caroline Ellison, the former head of Alameda Research, and Gary Wang, the former chief technology officer of FTX, have been charged over their role in the alleged fraud that allegedly led to the collapse of FTX.

Both stated that they would work with the public prosecutor to clarify the background of the bankruptcy.

The US Securities and Exchange Commission said on Wednesday evening that it had also indicted FTX managers Ellison and Wang for their involvement in a multi-year scam against investors.

According to court documents, the two managers signed agreements stipulating that they each post $250,000 bail for their release.

In addition, the public prosecutor's office can take their cooperation into account if they "have provided significant support in the investigation or the prosecution".

Manhattan District Attorney Damian Williams called on others involved in the alleged fraud to come forward.

"If you have been involved in any wrongdoing at FTX or Alameda, now is the time to speak up," Williams said in a video posted via Twitter.

"We're moving fast, and our patience isn't eternal."

With the confessions of his former close associates, the pressure on Bankman-Fried increases significantly.

He is expected to appear in US federal court in Manhattan on Thursday.

He is expected to be asked to make a confession.

The US judge will decide whether to grant bail and under what conditions.

FTX filed for bankruptcy protection on Nov. 11 after clients withdrew funds en masse in response to the covert move of $10 billion in deposits.

Bankman-Fried resigned as chief the same day.

He has apologized to customers but denied allegations of fraud.

The US Securities and Exchange Commission has accused the manager of fraud.

The agency accuses Bankman-Fried of misleading investors with false promises and embezzling their funds.

It's worth more than $1.8 billion.

The FTX founder was arrested on December 12 at the request of the US authorities in the Bahamas.

In the United States, he faces a long prison sentence.

Bankman-Fried was considered a crypto prodigy and just a few months ago graced the front pages of US business publications such as "Fortune".

mmq/dpa/Reuters