FTX founder Sam Bankman-Fried is in the headlines yet again this week as his criminal trial starts to fall into place. The crypto magnate has had a busy few weeks, watching his company and wealth fall apart. Now, Bankman-Fried is moving through the legal system at breakneck speed. The ex-exec has gone from a Bahamas penthouse to the courthouse and now to the U.S. and FBI custody. Meanwhile, his one-time allies from FTX and Alameda Research are taking plea deals to escape their own sentences, cooperating with the investigation.
Things are moving jarringly fast for FTX executives. Nov. 3 saw the initial news break that FTX was in a poor financial position of its own doing. Less than two months later, the company is long bankrupt and executives find themselves facing century-long prison sentences.
Sam Bankman-Fried’s personal saga has been wildly interesting for investors to watch. Almost immediately after FTX’s liquidity crunch, Bankman-Fried took to mainstream media. There, he did a lot of apologizing, admitted he was in far over his head and blaming peers at FTX and Alameda Research for the collapse. Of course, most of this commentary has been provided against the wishes of his own legal team.
That string of interviews has gotten many people talking about FTX. But it hasn’t helped to clear his name at all. Last Monday, Bankman-Fried was arrested in the Bahamas on charges made by the United States. The charges range from fraud to money laundering to campaign finance violations and carry a maximum sentence of 115 years. After landing in the U.S. on Wednesday evening, Bankman-Fried now finds himself in FBI custody.
FTX Executives, Partners Take Plea Deals as Charges Continue to Stack Up
FTX continues to see charges mount against it. On Wednesday, the U.S. Securities & Exchange Commission (SEC) filed a complaint calling the FTX Token (FTT-USD) a security rather than a currency. This is a common complaint of the SEC against cryptos, but the charges throw far more complication atop FTX’s legal struggles. With FTX facing more heat than ever before, Bankman-Fried’s peers are getting out of the kitchen.
In early December, internet sleuths went buzzing when Alameda Research CEO and close Bankman-Fried associate Caroline Ellison was spotted in New York City. At the time of the collapse, Ellison had been in Hong Kong at the Alameda headquarters. This stirred up rumors that Ellison, who was facing similarly lengthy sentences as Bankman-Fried, was working with the Feds on a plea deal.
These rumors are more or less confirmed today as Ellison and FTX co-founder Gary Wang take plea deals, cooperating with the investigation. This news isn’t particularly surprising; Bankman-Fried almost immediately put the blame on his counterparts in a very public way.
Under these terms, Ellison and Wang will likely avoid their jail time by acting as key witnesses in Sam Bankman-Fried’s criminal trial. The two are the foremost experts on FTX’s inner-workings and the closest associates to Bankman-Fried. As such, their cooperation will provide the most damning evidence against Bankman-Fried in the trial, revealing the scope of the founder’s knowledge of what was happening at FTX.
On the date of publication, Brenden Rearick did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.