SEC v. Caroline Ellison

Caroline Ellison, Zixiao (Gary) Wang, and Nishad Singh allegedly violated the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder and Section 17(a) of the Securities Act of 1933. According to the SEC, from at least May 2019 through November 2022, Samuel Bankman-Fried and FTX raised more than $1.8 billion dollars from investors by falsely claiming FTX was a safe crypto asset trading platform, and by telling investors that Alameda was just another platform customer with no special privileges. In reality, Bankman-Fried, Wang, and Singh, with Ellison’s knowledge and consent, had exempted Alameda from the risk mitigation measures and provided Alameda with a virtually unlimited “line of credit” funded by FTX’s customers. The complaints also alleged that Wang and Singh created FTX’s software code that allowed FTX customer funds to be diverted to Alameda, and that Ellison used misappropriated FTX customer funds for Alameda’s trading activity. According to the complaints, Bankman-Fried, with the knowledge of Ellison, Wang, and Singh, directed hundreds of millions of dollars more in FTX customer funds to Alameda, where these funds were used for additional venture investments and “loans” to Bankman-Fried and other FTX executives, including Wang and Singh.

Summary generated from official Securities and Exchange Commission press release