Read the SEC Complaint Against Caroline Ellison, FTX’s Gary Wang

  • According to the SEC, two executives who were associated with Sam Bankman Fried face criminal charges.
  • It said Alameda Research’s Caroline Ellison and FTX’s Gary Wang were “active participants” in fraud.
  • Wednesday was the publication of the SEC complaint. You can read it here.

Two of Sam Bankman Fried’s top executives were accused of participating in a scheme that defrauded FTX’s equity customers and investors, according to the Securities and Exchange Commission in a Wednesday complaint.

Bankman-Fried is the co-founder of the crypto trading platform FTX, and the hedge fund Alameda Research. was arrested in the BahamasLast week, he was extradited to the US where federal prosecutors charged him with eight countsThis includes wire fraud and conspiracy for money laundering.

Wednesday’s statement by the SEC stated that it also had filed charges against Caroline Ellison, the former CEO of Alameda, and Wang, who cofounded FTX and served as its chief technology officer. The regulator accused Ellison of being “active participants” and Wang of being part in a scheme Bankman-Fried designed to defraud customers, investors, and their families for years.

Bankman-Fried was accused of siphoning FTX customers’ funds for his own use on venture investments and real-estate purchases as well as political donations. According to the SEC, Bankman-Fried made Alameda his personal piggy bank.

In its latest complaint, SEC claimed that Ellison manipulated FTT, FTX’s internal token, by buying large quantities of FTT on the open market. This, the agency claimed, led to an increase in the valuation of Alameda Research’s FTT holdings. Additionally, it caused Alameda’s balance sheet to show collateral that was overstated and misleading investors.

The SEC claimed that Wang created software to divert FTX customer money to Alameda, and that Ellison misappropriated these funds to support Alameda’s trading activities. Alameda had special privileges that allowed it access to FTX customer assets “to a virtually limitless extent for its own use,” according to the SEC.

The agency said Ellison and Wang also knew — or should have known — that statements Bankman-Fried made to investors about FTX’s financial condition and risk management, as well as its separation from Alameda, were “false and misleading.” They also stated that they knew FTX had not told its customers and investors that Alameda used customer funds to trade strategies and service third-party lender debt.

“When FTT collapsed and the rest of he house of cards collapsed,” Gary Gensler (chair of the SEC) said in a statement.

According to the SEC, Ellison and Wang cooperated with the investigation.

Here’s the complete complaint:

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