Former CEO of Alameda Research Carolyn Ellison has apologized for her misdeeds pertaining to the collapse of FTX as well as Alameda. Gary Wang, FTX co-founder and former CTO, has also acknowledged his errors, according to multiple reports.
Both Ellison and Wang have pleaded guilty to charges regarding the failure of FTX in a move to ensure leniency from their courts. In return, the two former executives are cooperating with prosecutors providing much-needed inside information as to where everything went wrong, sharing former FTX CEO Sam Bankman-Fried’s participation in the ploy.
According to WSJ.com, Ellison apologized for what she did, stating, “I knew it was wrong.”
Citing court transcripts, the report quotes Ellison:
“I also understood that many FTX customers invested in crypto derivatives and that most FTX customers did not expect that FTX would lend out their digital asset holdings and fiat currency deposits to Alameda in this fashion.”
AP reported that Ellison said she wanted to apologize for her actions to impacted customers and investors. She added that from last July to October, she worked with Bankman-Fried, and others to cook the books, concealing the extent of their malfeasance.
Ellison told the court she participated in borrowing funds from FTX, unbeknownst to investors, while doling out billions in loans to FTX executives.
Wang admitted he was in on the scheme too, spilling the fact he created the backdoor to the platform to cover their tracks:
“As part of my employment at FTX, I was directed to and agreed to make certain changes to the platform’s code.”
Certain proceedings were sealed in anticipation of FTX founder Bankman-Fried’s extradition back to the US – which took place this week. There were concerns he may have balked once he knew his former co-workers and ex-girlfriend were providing information that would be used in his prosecution. Bankman-Fried is currently facing eight separate criminal charges.
The failure of FTX is one of the largest frauds in US history. Estimates place the loss at around $8 billion. While Bankman-Fried attempted to place blame on managerial errors and his detachment from operations, the new CEO managing FTX labeled it old-school embezzlement.
While Ellison and Wang may be able to cut a deal where they spend a limited amount of time in prison, Bankman-Fried may not be as lucky as the mastermind behind the crime. After making bail, Bankman-Fried is back in his parents’ home, effectively under house arrest. Both Ellison and Wang are now out on bail too.