CRIMINAL CRYPTO CAPITALI$M;FTX
Caroline Ellison reportedly told court 'I knew it was wrong.' Here's what could be next for the onetime crypto exec and SBF's ex-girlfriend.Sindhu Sundar
Fri, December 23, 2022
Tyler Le/Insider
Caroline Ellison, Alameda's ex-CEO, is out on a $250,000 bond after pleading guilty in the FTX case.
She reportedly expressed contrition in court, saying, "I knew that it was wrong."
Cooperators may give up a high level of autonomy in hopes of a lighter sentence, legal experts said.
Caroline Ellison's world is about to get a whole lot smaller since the heady days of working and living with a group of colleagues — including her ex-boyfriend, FTX's former CEO Sam Bankman-Fried — in the Bahamas.
The plea deals thatEllison, who was the CEO of Bankman-Fried's trading firm Alameda Research, and FTX cofounder Gary Wang have struck with federal prosecutors in New York free them each on $250,000 bonds.
At a hearing on Dec. 19, before those plea deals were made public, Ellison told the New York federal court overseeing the FTX criminal cases that she is "truly sorry" and that she "knew that it was wrong," the Wall Street Journal reported on Friday. She also said she knew FTX essentially allowed Alameda to borrow customer funds, according to Bloomberg.
"I understood that if Alameda's FTX accounts had significant negative balances in any particular currency, it meant that Alameda was borrowing funds that FTX's customers had deposited on the exchange," according to a transcript of the hearing cited by Bloomberg.
Ellison and Wang's plea deals don't involve the same rigid surveillance imposed on Bankman-Fried, who left a New York federal court on Thursday on a $250 million bail and wearing an ankle monitor. But cooperators like Ellison may still be fairly tethered to prosecutors and alienated from former circles while the government builds its case against Bankman-Fried.
For instance, Ellison's deal all but forbids her from talking about the events surrounding FTX and Alameda without prosecutors' permission, and limits her travel to within the continental US.
Attorneys for Ellison and others in the web of FTX and Alameda have most likely also advised their clients against communicating with one another during the US government's ongoing criminal investigation, white-collar experts told Insider.
"Her day-to-day has to have dramatically changed based on these charges and her status as a cooperator," said Nancy DePodesta, who co-chairs the white-collar defense practice at Saul Ewing LLP and who was previously a federal prosecutor in Chicago.
"Yes, she's still free to go about life, so to speak, with certain restrictions, of course," DePodesta added. "But her former colleagues are going to shy away from her by virtue of the fact that she is cooperating."
An attorney for Ellison didn't respond to requests for comment on Thursday.
Ellison has pleaded guilty to seven counts against her in a charging document called an information, which prosecutors unveiled this week. The government has portrayed Ellison and Wang as active henchmen in Bankman-Fried's alleged scheme to use FTX customer funds to bring money into his separate firm Alameda, according to a civil complaint filed on Wednesday by the US Securities and Exchange Commission.
The criminal counts against Ellison, including for wire fraud and conspiracy, mirror those against Bankman-Fried. But unlike his charges, hers weren't a product of a grand jury indictment, as her cooperation and plea relieved prosecutors of taking that step.
The counts against Ellison carry a maximum penalty of 110 years, if the sentences for each were to be stacked up. But her cooperation could secure her a much lighter sentence, perhaps even no jail time at all, depending on how useful prosecutors find her help, and what the judge decides.
"It would be nothing close to what they'd be exposed to if they were to go to trial," said Andrey Spektor, a white collar partner at Bryan Cave Leighton Paisner LLP and former federal prosecutor in Brooklyn. Spektor was referring to the kinds of sentences that cooperators can expect.
But there's a long road ahead. Bankman-Fried's own proceedings in the US are just beginning, and he is expected to enter his plea on Jan. 3.
Cooperators like Ellison and Wang typically remain behind the scenes. They won't be sentenced until after prosecutors unveil much more of their investigation and Bankman-Fried's own fate becomes clearer.
In the meantime, Ellison and Wang would be expected to continue working with investigators.
"Even though we might not be seeing her in court any time soon, prosecutors are likely to be working with her insofar as they believe she has more information that would help them," said Carl Tobias, a law professor at the University of Richmond.
Caroline Ellison told a judge that FTX executives secretly borrowed billions from Alameda Research, report says
Sam Tabahriti
Sat, December 24, 2022
Caroline Ellison told a judge that FTX executives received billions in hidden loans from Alameda Research.Tyler Le/Insider
Caroline Ellison told a judge that FTX execs secretly borrowed billions from Alameda Research.
She said she and Sam Bankman-Fried concealed the credit line from FTX investors and customers.
She pleaded guilty to several charges on December 19 that carry jail sentences of up to 110 years.
Caroline Ellison said FTX executives received billions in hidden loans from Alameda Research, according to a transcript of her plea hearing seen by Reuters.
The former Alameda CEO said that she agreed with Sam Bankman-Fried to hide from FTX investors, lenders, and customers that the trading platform could borrow unlimited sums from Alameda, Reuters reported.
Ellison told US District Judge Ronnie Abrams in Manhattan federal court that they "prepared certain quarterly balance sheets that concealed the extent of Alameda's borrowing and the billions of dollars in loans that Alameda had made to FTX executives and to related parties," according to the news agency.
Ellison, Bankman-Fried's ex-girlfriend, pleaded guilty to seven charges on December 19, carrying up to 110 years in prison after striking a plea deal with the Justice Department. The court unsealed the transcript of her plea hearing on December 22.
FTX cofounder Gary Wang also pleaded guilty. The plea deals that they both have struck with federal prosecutors in New York freed them each on bonds of $250,000. Ellison and Wang are now cooperating with prosecutors as part of their plea agreements.
Wang said during his plea hearing on December 19 that he was directed to change FTX code to give Alameda special privileges on the trading platform.
Ellison has agreed to waive any defenses to the charges. Per her deal with prosecutors, she also agreed to pay restitution that is yet to be determined. She must also provide documents, records, and evidence to prosecutors, as well as testify to a grand jury or at court trials when requested.
A lawyer for Ellison did not immediately respond to a request for comment from Insider.
In November, Reuters reported that Bankman-Fried secretly moved $10 billion in FTX customer funds to Alameda Research. Up to $2 billion is still missing, sources told the news agency.
Bankman-Fried told Reuters the sum was not "secretly" transferred: "We had confusing internal labeling and misread it."
FTX filed for Chapter 11 bankruptcy protection on November 11 after it imploded, wiping out customer deposits worth billions. Bankman-Fried resigned as CEO the same day.
Sat, December 24, 2022
Caroline Ellison told a judge that FTX executives received billions in hidden loans from Alameda Research.Tyler Le/Insider
Caroline Ellison told a judge that FTX execs secretly borrowed billions from Alameda Research.
She said she and Sam Bankman-Fried concealed the credit line from FTX investors and customers.
She pleaded guilty to several charges on December 19 that carry jail sentences of up to 110 years.
Caroline Ellison said FTX executives received billions in hidden loans from Alameda Research, according to a transcript of her plea hearing seen by Reuters.
The former Alameda CEO said that she agreed with Sam Bankman-Fried to hide from FTX investors, lenders, and customers that the trading platform could borrow unlimited sums from Alameda, Reuters reported.
Ellison told US District Judge Ronnie Abrams in Manhattan federal court that they "prepared certain quarterly balance sheets that concealed the extent of Alameda's borrowing and the billions of dollars in loans that Alameda had made to FTX executives and to related parties," according to the news agency.
Ellison, Bankman-Fried's ex-girlfriend, pleaded guilty to seven charges on December 19, carrying up to 110 years in prison after striking a plea deal with the Justice Department. The court unsealed the transcript of her plea hearing on December 22.
FTX cofounder Gary Wang also pleaded guilty. The plea deals that they both have struck with federal prosecutors in New York freed them each on bonds of $250,000. Ellison and Wang are now cooperating with prosecutors as part of their plea agreements.
Wang said during his plea hearing on December 19 that he was directed to change FTX code to give Alameda special privileges on the trading platform.
Ellison has agreed to waive any defenses to the charges. Per her deal with prosecutors, she also agreed to pay restitution that is yet to be determined. She must also provide documents, records, and evidence to prosecutors, as well as testify to a grand jury or at court trials when requested.
A lawyer for Ellison did not immediately respond to a request for comment from Insider.
In November, Reuters reported that Bankman-Fried secretly moved $10 billion in FTX customer funds to Alameda Research. Up to $2 billion is still missing, sources told the news agency.
Bankman-Fried told Reuters the sum was not "secretly" transferred: "We had confusing internal labeling and misread it."
FTX filed for Chapter 11 bankruptcy protection on November 11 after it imploded, wiping out customer deposits worth billions. Bankman-Fried resigned as CEO the same day.
Read the SEC complaint accusing former Alameda CEO Caroline Ellison and FTX cofounder Gary Wang of participating in a years-long fraud with Sam Bankman-Fried
Grace Dean
Thu, December 22, 2022
Two execs associated with Sam Bankman-Fried are facing criminal charges, the SEC said.
It said Alameda Research's Caroline Ellison and FTX's Gary Wang were "active participants" in fraud.
Two of Sam Bankman-Fried's top executives are accused of participating in a scheme to defraud FTX's equity investors and customers, the Securities and Exchange Commission said in a complaint published Wednesday.
Bankman-Fried, who cofounded the crypto trading platform FTX and the hedge fund Alameda Research, was arrested in the Bahamas last week and was extradited to the US on Wednesday, where federal prosecutors have charged him with eight counts including wire fraud and conspiracy to commit money laundering.
The SEC on Wednesday said it had also 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 and Wang of being "active participants" in what it has described as a years-long scheme led by Bankman-Fried to defraud customers and investors.
Bankman-Fried has been accused of siphoning off FTX customers' money for his personal use on venture investments, real-estate purchases, and political donations. The SEC says Bankman-Fried used Alameda as "his personal piggy bank."
The SEC said in its latest complaint that Ellison manipulated the price of FTT, FTX's in-house token, by purchasing large quantities on the open market. The agency said this inflated the valuation of Alameda Research's FTT holdings and caused the value of collateral on Alameda's balance sheet to be overstated, misleading investors.
The SEC said that Wang created software that helped divert FTX customer funds to Alameda and that Ellison misappropriated these funds for Alameda's trading activity. The SEC said special privileges given to Alameda enabled it to draw on FTX customer assets "to a virtually unlimited extent for its own uses."
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." It also said they knew FTX hadn't told its investors and customers that customer funds were used by Alameda for trading strategies and servicing debt to third-party lenders.
"When FTT and the rest of the house of cards collapsed, Mr. Bankman-Fried, Ms. Ellison, and Mr. Wang left investors holding the bag," the SEC's chair, Gary Gensler, said in a statement.
The SEC said Ellison and Wang were cooperating with the investigation.
Grace Dean
Thu, December 22, 2022
Two execs associated with Sam Bankman-Fried are facing criminal charges, the SEC said.
It said Alameda Research's Caroline Ellison and FTX's Gary Wang were "active participants" in fraud.
Two of Sam Bankman-Fried's top executives are accused of participating in a scheme to defraud FTX's equity investors and customers, the Securities and Exchange Commission said in a complaint published Wednesday.
Bankman-Fried, who cofounded the crypto trading platform FTX and the hedge fund Alameda Research, was arrested in the Bahamas last week and was extradited to the US on Wednesday, where federal prosecutors have charged him with eight counts including wire fraud and conspiracy to commit money laundering.
The SEC on Wednesday said it had also 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 and Wang of being "active participants" in what it has described as a years-long scheme led by Bankman-Fried to defraud customers and investors.
Bankman-Fried has been accused of siphoning off FTX customers' money for his personal use on venture investments, real-estate purchases, and political donations. The SEC says Bankman-Fried used Alameda as "his personal piggy bank."
The SEC said in its latest complaint that Ellison manipulated the price of FTT, FTX's in-house token, by purchasing large quantities on the open market. The agency said this inflated the valuation of Alameda Research's FTT holdings and caused the value of collateral on Alameda's balance sheet to be overstated, misleading investors.
The SEC said that Wang created software that helped divert FTX customer funds to Alameda and that Ellison misappropriated these funds for Alameda's trading activity. The SEC said special privileges given to Alameda enabled it to draw on FTX customer assets "to a virtually unlimited extent for its own uses."
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." It also said they knew FTX hadn't told its investors and customers that customer funds were used by Alameda for trading strategies and servicing debt to third-party lenders.
"When FTT and the rest of the house of cards collapsed, Mr. Bankman-Fried, Ms. Ellison, and Mr. Wang left investors holding the bag," the SEC's chair, Gary Gensler, said in a statement.
The SEC said Ellison and Wang were cooperating with the investigation.
Read the full complaint here:
Photos of Caroline Ellison are hard to find, so here are 20 portraits by a robot of your fallen crypto queen wishing you a very happy holiday
Nicholas Carlson
Fri, December 23, 2022
Insider/Lensa
Perhaps you saw the news earlier this week that Caroline Ellison, the former Alameda Research CEO and ex-lover of Sam Bankman-Fried, pleaded guilty to charges that carry up to 110 years in prison.
If you did, you probably saw the same photo of Ellison that everyone has seen dozens of times.
I'm talking about the one where she's looking at the camera through big glasses with a big smile, looking more like a Hufflepuff than a notorious white-collar criminal.
We at Insider are a little tired of this photo and think the world also deserves a new image of such a notable person from the tumultuous year soon coming to a close.
So we paid the robots at Lensa to come up with a new one – or a new 20 or so. And now we'd like to share them with you.
So here you are! Happy holidays from Insider and a robot's vision of your fallen crypto queen, Caroline Ellison.
Charges against Ellison include conspiracy to commit wire fraud, securities fraud, and commodities fraud.
Insider/Lensa
There's also a charge of conspiracy to commit money laundering.
Insider/Lensa
She waived her defense of all charges.
Insider/Lensa
She's agreed to pay restitution.
Lensa/Insider
That could be a big figure!
Insider/Lensa
FTX lost billions in client holdings.
Lensa/Insider
Much of the funds were allegedly lost via a hedge fund run by Ellison.
Lensa/Insider
Allegedly, FTX lent its clients' holdings to Alameda.
Insider/Lensa
Ellison is from the suburbs of Boston, where white Christmases are common.
Lensa/Insider
Her parents work at MIT.
Lensa/Insider
Funny enough, SBF's parents have worked at Stanford.
Lensa/Insider
Ellison later went to Stanford.
Insider/Lensa
After college, she worked at Jane Street, a Wall Street trading firm.
Lensa/Insider
She joined Alameda in 2018 after SBF reportedly told her "we don't really know what we're doing."
Lensa/Insider
Source: Forbes
She made the Forbes 30 Under 30 list in 2022! Wow!
Lensa/Insider
She and SBF and eight others lived together in the Bahamas.
Lensa/Insider
On a Tumblr believed to be hers, she described it as an "imperial Chinese harem."
Insider/Lensa
Source: Screenshot of the Ellison's supposed Tumblr provided by Twitter handle @OxHonky.
Reuters reported in November that Bankman-Fried allegedly secretly moved $10 billion in customer funds from FTX to Alameda Research.
Lensa/Insider
Source: Insider.
"We didn't secretly transfer," SBF told Reuters. "We had confusing internal labeling and misread it." Oops!
Insider/Lensa
Source: Insider.
Read the original article on Business Insider
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