FTX co-founder and CEO Sam Bankman-Fried’s prosecutors just scored a major victory by turning two of his alleged accomplices against him.
It’s amazing how much can change in just a matter of weeks. In early November, Bankman-Fried (SBF) was a cryptocurrency billionaire, and the face of one of the world’s largest crypto exchanges. About seven weeks later, the three letters “SBF” are practically synonymous with malfeasance in the crypto world, and Bankman-Fried’s prospects for a light sentence — let alone an acquittal — are rapidly diminishing.
On Wednesday, federal prosecutors announced that Alameda Research CEO Caroline Ellison pled guilty to a series of fraud charges. Alameda Research is the FTX-affiliated hedge fund where SBF allegedly funded risky investments with FTX deposits. Ellison faces up to 120 years in prison.
FTX co-founder Gary Wang also pled guilty to fraud charges and faces up to 50 years in prison.
Both Ellison and Wang have agreed to cooperate with prosecutors in the case against Bankman-Fried.
As for SBF, after spending the past week and a half in a Bahamian jail, the now-disgraced former crypto kingpin was extradited to the U.S. on Wednesday night. On Thursday a judge in New York approved a $250 million bond for SBF’s release.
FTX was once one of the largest crypto exchanges in the world. Shortly before its collapse, FTX was valued at $32 billion. In November, reports from Coindesk and independent crypto investigator Mike Burgersberg revealed that FTX’s hedge fund, Alameda Research, appeared to be insolvent. As a result of this news, competing crypto exchange Binance sold off its holdings of FTX’s own crypto token, FTT. FTX customers followed, with billions of dollars being withdrawn from the exchange.
By Nov. 11, FTX had filed for bankruptcy and SBF had stepped down as CEO.
On Dec. 12, SBF was arrested in the Bahamas. He faces a plethora of federal charges related to wire fraud, money laundering, and even violating campaign finance laws.