Damian Williams, the US Attorney for the Southern District of New York, announced late Wednesday that former FTX and Alameda Research executives Caroline Ellison and Zixiao "Gary" Wang have pleaded guilty to federal charges.
According to Politico, this is in connection to the multibillion-dollar fraud case, which was allegedly orchestrated by FTX founder and CEO Sam Bankman-Fried through his crypto exchange personal hedge fund.
Ellison and Wang were former friends and colleagues of Bankman-Fried, who had significant roles in the collapse of FTX.
Caroline Ellison, Gary Wang Plead Guilty to Federal Charges
The US Attorney did not detail the charges the two pled to but stated that the guilty pleas were related to their roles as insiders at FTX and its sister company, Alameda Research.
Wang, a co-founder of the FTX cryptocurrency exchange, owned 10 percent of Alameda Research, while Bankman-Fried owned the other 90 percent.
Meanwhile, Ellison was the former CEO of Alameda Research, Bankman-Fried's trading company.
According to The Washington Post, Ellison pleaded guilty to seven counts of fraud. The Verge says she faces up to 110 years in prison.
On the other hand, Wang pleaded guilty to four counts. With this, he faces up to 50 years in prison.
Likewise, the Securities and Exchange Commission (SEC) charged Ellison and Wang "for their roles in a multiyear scheme to defraud equity investors in FTX," according to ABC News.
According to Wang's attorney, Ilan Graff, the FTX co-founder has accepted responsibility for his actions. In addition, he takes his obligations as a cooperating witness seriously.
The updated SEC complaint states that Wang, with Ellison's knowledge and consent, exempted Alameda from the risk mitigation measures that FTX used, thus, providing Alameda Research with a "virtually unlimited" line of credit.
Read Also: Former FTX CEO Sam Bankman-Fried Has Been Arrested in the Bahamas
Caroline Ellison, Gary Wang Are Cooperating with Federal Prosecutors
According to statements released by officials, Ellison and Wang are cooperating with federal prosecutors and civil regulators as they investigate FTX's collapse.
The federal charges against the two and the recent disclosure of their cooperation with the prosecutors mark the latest development in Bankman-Fried's controversy.
The FTX CEO was among the industry's most respected executives. He was regularly present in Washington as lawmakers, as well as market regulators, crafted new rules for crypto over the last year.
The announcement made by Williams coincided with the SEC filing civil fraud charges against Ellison and Wang.
The two executives were accused of manipulating the price of FTT, an FTX-native token that was at the center of the trading scandal that triggered the collapse of the FTX CEO's investment empire.
Moreover, they are also accused of misusing customer funds in order to backstop Alameda's crypto trades. Similarly, they are accused of helping mislead FTX investors.
According to the SEC complaint, Bankman-Fried and Wang gave Alameda and Ellison "carte blanche" to utilize FTX customer assets for Alameda's trading operations.
Relative to the case, Bankman-Fried agreed to be extradited from the Bahamas earlier Wednesday.
Currently, he is in FBI custody. He will face charges of wire fraud, money laundering, and campaign finance violations.
Related Article: FTX Founder Sam Bankman-Fried Gets Fraud Charge, Denied Bail
