A trio of former executives with failed crypto giant FTX Trading Ltd. and its related crypto hedge fund, Alameda Research Ltd., are being sanctioned in proposed consent judgments with the U.S. Securities and Exchange Commission (SEC).
The SEC filed the proposed judgments with Caroline Ellison, the former CEO of Alameda, Zixiao (Gary) Wang and Nishad Singh, the former chief technology officer and the former co-lead engineer at FTX, respectively, resolving the SEC’s charges against them in connection with the collapse of FTX and Alameda.
The SEC’s complaints alleged that, between May 2019 and November 2022, FTX and its chief, Sam Bankman-Fried, raised more than US$1.8 billion from investors “by falsely claiming FTX was a safe crypto asset trading platform with sophisticated automated risk mitigation measures to protect customer assets, and by telling investors that Alameda, a crypto asset hedge fund owned by Bankman-Fried and Wang, was just another platform customer with no special privileges.”
In reality, the SEC alleged, Alameda was exempt from FTX’s risk mitigation measures, and it was given a “virtually unlimited ‘line of credit’ funded by FTX’s customers,” which Alameda used for trading, venture investments, and “loans” to Bankman-Fried and other FTX executives, including Wang and Singh.
Without denying the commission’s allegations, Ellison, Wang and Singh consented to the entry of final judgments, which would impose five-year conduct-based injunctions. Ellison also consented to a 10-year officer-and-director ban, and Wang and Singh consented to eight-year bans.
The judgments are subject to court approval.
In 2024, Ellison, who was a key prosecution witness in the case against Bankman-Fried, was sentenced to two years in prison for her role in the scandal. She previously pleaded guilty to various counts of wire fraud, conspiracy to commit wire fraud, conspiracy to commit securities fraud and conspiracy to commit money laundering.
Wang and Singh also cooperated with the government’s case against Bankman-Fried, and pleaded guilty to various charges against them. They were sentenced to time served.