US Regulators Charge Alameda CEO and FTX Co-Founder for Deceiving FTX's Investors

The Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) have filed fraud charges against Caroline Ellison, Alameda CEO, and Gary Wang, Alameda and FTX Co-Founder, for their roles in a multiyear scheme to defraud equity investors in FTX, the crypto trading platform co-founded by Samuel Bankman-Fried and Wang.

According to the regulators, Ellison, at the direction of Bankman-Fried, furthered the scheme by manipulating the price of FTT, an FTX-issued exchange crypto security token, by purchasing large quantities on the open market to prop up its price.

Ellison and Wang were active participants in the scheme to deceive FTX's investors and engaged in conduct that was critical to its success. Wang created FTX's software code that allowed Alameda to divert FTX customer funds, and Ellison used misappropriated FTX customer funds for Alameda's trading activity.

"As part of their deception, we allege that Caroline Ellison and Sam Bankman-Fried schemed to manipulate the price of FTT, an exchange crypto security token that was integral to FTX, to prop up the value of their house of cards," said SEC Chair Gary Gensler. "We further allege that Ms. Ellison and Mr. Wang played an active role in a scheme to misuse FTX customer assets to prop up Alameda and to post collateral for margin trading. When FTT and the rest of the house of cards collapsed, Mr. Bankman-Fried, Ms. Ellison, and Mr. Wang left investors holding the bag."

"With today's charges we continue to move aggressively to hold all individuals who commit fraud accountable and protect customers from additional harm and losses. In the absence of a comprehensive regulatory framework over digital assets, the CFTC will use all of its existing power and authority to protect all market participants, while ensuring the integrity of commodity markets," said CFTC Chairman Rostin Behnam.