Key Takeaways
- Three individuals agreed to permanent injunctions preventing future violations of federal antifraud laws, alongside conduct-based restrictions lasting five years.
- Regulator hit out that Wang and Singh were responsible for developing software code that enabled customer assets to be routed from FTX to Alameda
US regulators have imposed long-term corporate leadership prohibitions on three senior figures tied to the collapse of crypto exchange FTX, barring them from holding executive or board positions for up to a decade.
The US Securities and Exchange Commission (SEC) said on Friday that former Alameda Research chief executive Caroline Ellison, along with former FTX executives Gary Wang and Nishad Singh, consented to final civil judgments related to their roles in the misuse of customer funds between 2019 and 2022. The agreements were reached without the defendants admitting or denying the agency’s allegations.
As per the security regulator, three individuals agreed to permanent injunctions preventing future violations of federal antifraud laws, alongside conduct-based restrictions lasting five years. Ellison accepted a 10-year officer-and-director bar, while Wang and Singh each agreed to eight-year bans.
“Without denying the Commission’s allegations, Ellison, Wang, and Singh consented to the entry of final judgments, subject to court approval, in which they agreed to be permanently enjoined from violating 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, and to 5-year conduct-based injunctions,” the SEC said.
Ellison, who served as the government’s key witness, received a two-year prison sentence under a plea agreement, with eligibility for early release. Wang and Singh, also cooperating witnesses, were sentenced to time served.
The SEC’s complaint detailed how internal safeguards at FTX were bypassed to benefit Alameda Research, the hedge fund closely tied to the exchange. “In reality, as alleged in the complaints, [Sam] 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 agency said.
Further, the regulator hit out that Wang and Singh were responsible for developing software code that enabled customer assets to be routed from FTX to Alameda, while Ellison oversaw trading activities that relied on those misappropriated funds.
The civil penalties follow the criminal prosecution of former FTX chief executive Sam Bankman-Fried, who was sentenced to 25 years in prison after being convicted on seven counts related to fraud and conspiracy. Ellison, Wang and Singh all cooperated with federal prosecutors and testified against SBF during his trial, as per reports.
Ellison has recently been moved from federal prison to a Residential Reentry Management field office in NYC, according to records from the Federal Bureau of Prisons. She is scheduled for release on February 20, several months before the end of her sentence, indicating the app of good-conduct credits.
Bankman-Fried, meanwhile, is pursuing an appeal of his conviction. A hearing in the US Court of Appeals for the Second Circuit took place on November 4, with a decision pending.
The SEC said the leadership bans are intended to prevent future misconduct and reinforce accountability for executives overseeing digital asset platforms that handle customer funds.