Sam Bankman-Fried seemed to be trying to get ahead of former Alameda Research CEOCaroline Ellison's cooperation deal with prosecutors, subtly blaming her for FTX's collapse.
Federal prosecutors had a deal with Gary Wang, Bankman-Fried's FTX co- founder, when Damian Williams announced Ellison's plea agreement. Wang was more important to FTX than Ellison was to Bankman- Fried.
Bankman- Fried is accused of orchestrating a yearslong fraud in which he used billions of dollars of FTX customer funds for personal expenses and high-risk bets.
Bankman-Fried was released on a $250 million bond after appearing in a US court. He has yet to enter a plea. A person for Bankman- Fried didn't respond to a request for comment.
Ellison ran from Hong Kong while he was in the Bahamas and Bankman-Fried tried to suggest he didn't know what was happening. His role in FTX's collapse is seen as mismanagement. Wang, who was FTX's chief technology officer and based in the Bahamas with Bankman- Fried, doesn't fit into that picture.
Sarah Paul is a former federal prosecutor in New York.
A former federal prosecutor said that Bankman-Fried may have planned to say that their relationship clouded his judgement. It would be more difficult to argue with Wang.
Those two were very close and business partners.
Wang and Bankman-Fried met at a high school math camp and were roommates at the MIT. The code for the exchange was written by Wang while they were sharing a house in Berkeley. They lived in Hong Kong and the Bahamas.
Gary will say that he is a fraudster and that he was at fault as well. It will be difficult for SBF to differentiate himself from that.
The maximum sentence for multiple fraud counts is decades in prison. Prosecutors are almost certain to recommend a lighter sentence. Both the Securities and Exchange Commission and the Commodity Futures Trading Commission have civil suits against them.
Wang has accepted responsibility for his actions and takes serious his obligations as a cooperating witness, according to his lawyer.
The underlying code that allowed Alameda to maintain an unlimited line of credit was created by Wang. The regulators said that Wang helped create other pathways that gave Alameda an unfair advantage.
Legal experts say the money being transferred to Alameda is hard to explain as mismanagement rather than fraud, and his former associates could be very damaging to Bankman-Fried. In other white-collar cases, defendants have tried to turn the tables and paint the cooperators as bad actors in order to save their skins.
The government says Bankman-Fried set up Alameda and FTX to cheat customers and investors. Ellison was the trading firm's chief executive officer until late last year, when he was replaced by Bankman- Fried.
Two cooperating witnesses will testify against him at trial.
The case is in the US District court in New York.
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