SEC files defrauding charges against Gary Wang & Caroline Ellison

The controversy surrounding FTX has taken a new turn, as the SEC has filed defrauding charges. The Securities and Exchange Commission recently charged the former CEO, Caroline Ellison, and the former CTO, Gary Wang.

The charges revolve around a multi-year scheme of defrauding FTX’s equity investors. Founded by Wang and Samuel Bankman-Fried, FTX exchange has been a hot topic for several months.

As per the complaint filed by the SEC, Ellison manipulated FFT’s price from 2019 to 2022. The former CEO purchased huge amounts of the token in the open market to boost its price. The FTX-based crypto token was used as collateral for several loans by the platform of its users’ assets to Alameda.

The cryptocurrency hedge fund is owned by Bankman-Fried and Wang, while Ellison operates it. The SEC claims that the parties manipulated FTT’s price to inflate Alameda’s holdings. However, this overstated Alameda’s balance sheet, misleading investors into assessing FTX’s risk spread.

Additionally, the complaint talks about Bankman-Fried raising billions of dollars. However, this was done by touting FTX as a secure cryptocurrency trading platform that boasts complex risk minimization measures to save user assets. The founder also showcased Alameda as a general customer without any special privileges.

Furthermore, the SEC charges say that both Ellison and Wang have been found guilty of violating the Securities Exchange Act of 1934 and the anti-fraud provisions of the Securities Act of 1933. Additionally, SEC tries to ensure that Ellison and Wang are not allowed to take part in the future

However, Wang and Bankman-Fried diverted FTX’s customer assets to the crypto hedge company. The SEC claims that the founders knew the statements were misleading and false.

The claims do not end here, as the SEC has accused Wang and Ellison of playing active roles in the scheme to mislead investors. The complaint states that since Wang wrote FTX’s codes, the founder diverted user funds, while Ellison also misused user funds to conduct trading via Alameda.

Given the massive scale and nature of the situation, every crypto enthusiast is closely following it. The SEC expects the complaint to be heard in the coming weeks, making it a critical time for FTX users.

David Cox

David is a finance graduate and crypto enthusiast. He projects his expertise in subjects like crypto and Blockchain while writing for CryptoNewsZ. Being from Finance background, he efficiently writes Price Analysis. Apart from writing, he actively nurtures hobbies like sports and movies.
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