The Commodity Futures Trading Commission (CFTC) has joined both the SEC and US Department of Justice in filing fraud charges against Caroline Ellison, former Alameda CEO, and Gary Wang, FTX co-founder and former CTO.
The CFTC initially filed the fraud action on December 13 against FTX founder and former CEO Samuel Bankman-Fried, FTX Trading Ltd., and Alameda Research, charging a fraudulent scheme that caused the loss of over $8 billion in FTX customer deposits. The complaint has now been amended to include the additional defendants.
The CFTC charges Ellison and Wang with engaging in a fraudulent scheme, including the material misrepresentations in connection with the sale of digital asset commodities in interstate commerce, and charges Wang with fraud in connection with the sale of digital asset commodities in interstate commerce.
The CFTC claims that Wang created features in the code underlying the FTX trading platform that allowed Alameda to maintain an essentially unlimited line of credit on FTX.
Ellison was said to have directed Alameda to use billions of dollars of FTX funds, including FTX customer funds, to trade on other digital asset exchanges and to fund various high-risk digital asset industry investments.
CFTC Chairman Rostin Behnam stated:
“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.”
CFTC Acting Director of Enforcement Gretchen Lowe said the CFTC will continue to work cooperatively with law enforcement partners to conduct rapid and comprehensive investigations regarding the allegations of fraud.
CFTC Commissioner Summer K. Mersinger issued a separate statement on the charges:
“Ellison and Wang must accept responsibility for their deceitful acts as set forth in the Amended Complaint and consent orders. The enormity of the financial losses and blatant fraudulent misconduct warrants the imposition of significant sanctions and meaningful injunctive relief when the damages aspect of the case against Ellison and Wang is resolved. I will continue to advocate for the Commission to be tireless as we pursue all those who played a role in this fraudulent scheme.”
Ellison and Wang do not contest their liability on the CFTC’s claims.