Execs’ plea deals hushed to get FTX founder to US
Prosecutors made request so crypto entrepreneur wouldn’t fight extradition
NEW YORK — A judge agreed to a request by prosecutors to keep secret that two of Sam Bankman-Fried’s executive associates had turned against him so that the cryptocurrency entrepreneur would agree not to fight extradition from the Bahamas to the United States, according to transcripts of plea deals made public Friday.
U.S. District Judge Ronnie Abrams said during plea proceedings Monday in Manhattan that transcripts of the pleas could remain sealed until Bankman-Fried reached New York.
U.S. Attorney Damian Williams announced the guilty pleas and cooperation deals by Carolyn Ellison, 28, and Gary Wang, 29, while Bankman-Fried flew to a Westchester County airport late Wednesday in the custody of FBI agents.
Bankman-Fried, 30, appeared in Manhattan federal court on Thursday, when he was released on $250 million bond after an electronic monitoring bracelet was attached to him and he agreed to live with his parents in Palo Alto, California, while awaiting trial.
Ellison, the former chief executive of Bankman-Fried’s cryptocurrency hedge fund trading firm, Alameda Research, and Wang, a founder of FTX, the crypto exchange, agreed to testify against Bankman-Fried in connection with their pleas.
Criminal charges lodged against Bankman-Fried were revealed on Dec. 13, when prosecutors said the entrepreneur began defrauding customers and investors after FTX’s 2019 founding by illegally diverting money to cover expenses, debts and risky trades at Alameda, which was created in 2017.
At her plea Monday afternoon, Ellison said, “I am truly sorry for what I did. I knew that it was wrong. And I want to apologize for my actions to the affected customers of FTX, lenders to Alameda and investors in FTX.”
Ellison said she was aware from 2019 through 2022 that Alameda was given access to a borrowing facility at FTX.com that allowed Alameda to maintain negative balances in various currencies.
She said she knew that if Alameda’s FTX accounts had significant negative balances in any currency, it meant that Alameda was borrowing funds that FTX’s customers had deposited into the exchange.
“While I was co-CEO and then CEO, I understood that Alameda had made numerous large illiquid venture investments and had lent money to Mr. Bankman-Fried and other FTX executives,” she said.
Ellison said that when many of those loans were recalled by lenders in June, she agreed with others to borrow several billion dollars from FTX to repay them.
From July to October, Ellison said, she agreed with Bankman-Fried and others to provide misleading financial statements to Alameda’s lenders and not to publicly disclose the true nature of the relationship between Alameda and FTX.
During his plea Monday, Wang said that between 2019 and 2022 while working at FTX, he was “directed to and agreed to make certain changes to the platform’s code” to give Alameda special privileges.