FTX co-founder Gary Wang, convicted of misusing funds in a bogus crypto exchange, could face sanctions after his case goes to trial.
On November 13, prosecutors in the U.S. District Court for the Southern District of New York filed a brief alleging that Wang provided significant assistance in the investigation of FTX-related crimes, as well as in the prosecution of Sam Bankman -Fried and several others. case.
Government lawyers stressed the importance of Wang’s testimony during the trial of Bankman-Fried, who was sentenced to 25 years in prison. They also suggested that if Judge Lewis Kaplan decided to sentence Wang, he could develop a tool to identify potential illegal activities in the crypto market. Prosecutors noted that Wang’s testimony was truthful and supported by other evidence.
“Wang also provided substantial assistance – and, in doing so, took steps to right past wrongs – by leveraging his extraordinary computer programming skills to detect potential fraud in the stock and cryptocurrency markets.”
Court filing
Wang, who pleaded guilty to wire fraud, commodities fraud and securities fraud in December 2022, awaits final sentencing on November 20.
Is the FTX story coming to an end?
The latest updates would make Wang the fifth and final FTX or Alameda Research executive to be sentenced. Bankman-Fried was the only one to plead not guilty. In contrast, Caroline Ellison, former CEO of Alameda, and Ryan Salame, co-CEO of FTX Digital Markets, pleaded guilty. All are currently serving federal prison sentences.
However, the Bankman-Fried case has continued to give rise to new details and legal proceedings, even as the founder of one of the world’s largest stock exchanges serves his prison sentence.
Meanwhile, Bankman-Fried’s assets are at risk
Previously, US prosecutors filed a lawsuit seeking to seize the cryptocurrency, which they say was used by Bankman-Fried to bribe Chinese officials.
The lawsuit, filed Nov. 12 in New York District Court, alleges that a Binance account, then worth about $8.6 million but which later grew to about $18.5 million, was used to launder money linked to bribes before the collapse of FTX in late 2022.
Prosecutors noted that in 2021, Chinese authorities froze two Alameda Research accounts on Chinese exchanges that held $1 billion in cryptocurrency. Later, on November 16, 2021, Bankman-Fried was recorded transferring $40 million to a personal wallet, after which the Alameda accounts were unfrozen. Prosecutors say Bankman-Fried initiated additional transactions worth tens of millions of dollars in cryptocurrency to complete the bribe.
“As a result of the investigation, the government learned that on or around November 16, 2021, at the direction of Bankman-Fried, approximately 40 million USDT (the “bribe payment”) was transferred from a wallet Alameda cryptocurrency exchange hosted by FTX.
Court filing
The account contained five linked deposit accounts, obscuring the origin of the bribes. They described an “influx” of deposits and withdrawals from the account and regular transfers of Bitcoin (BTC) and stablecoins to five wallets. Ellison said the total amount of bribes was approximately $150 million.
Bankman-Fried was initially indicted on additional charges related to financial fraud and bribery of foreign public officials, which were later dropped. On September 13, her defense team appealed, arguing that Bankman-Fried’s trial was unfair.
Meanwhile, FTX’s new management is bombarded with lawsuits
Meanwhile, FTX’s new management is once again preparing lawsuits and demanding money. This time from Binance.
FTX bankruptcy trustees have filed a lawsuit against Binance and its former CEO Changpeng Zhao, demanding a return of approximately $1.8 billion. The plaintiffs claim that Binance obtained the funds in a fraudulent transaction in 2021.
According to court documents, FTX and its trading subsidiary Alameda Research were likely insolvent from the start and certainly were insolvent on their balance sheets as of early 2021. Therefore, the plaintiffs allege that the stock buyback transaction was fraudulent.
The lawsuit is one of several filed by FTX and Alameda against their former investors, affiliates and customers as part of the bankruptcy case. On November 9, the companies filed 23 lawsuits. Among them are claims against the American exchange Crypto.com and the political group FWD.US founded by Mark Zuckerberg.
FTX also filed complaints against Anthony Scaramucci and his hedge fund, SkyBridge Capital. Attorneys for the exchange claim that in 2022, Bankman-Fried invested $67 million in various SkyBridge projects since Scaramucci was “seeking financial assistance.” However, these investments “brought virtually no profit,” the plaintiffs claim. According to court documents, FTX is now trying to recover more than $100 million in damages from the company.
Alameda also filed a lawsuit against Sasha Ivanov, the founder of the Waves blockchain. The company plans to return the $90 million invested in Vires Finance. This liquidity platform then ran on Waves.
“To distract from his involvement in the fraud, Ivanov attempted to publicly blame Alameda for destabilizing the Waves ecosystem, tweeting that Alameda had manipulated the WAVES price and organized FUD (“Fear, Uncertainty and Doubt”) campaigns. ) to trigger panic sales. »
Alameda Trial
And what’s next?
In general, the story of the leaders of FTX and the exchange are two different stories. While the platform’s executives serve their sentences, FTX’s creditors are frantically trying to return the money they wasted.
The debt owed to creditors is approximately $11.2 billion, and the funds available to cover the debt are between $14.6 billion and $16.3 billion.
So there is very little time left before this scandalous exchange story ends – to decide Wang’s punishment and repay everyone’s debts.
