Two of Sam Bankman-Fried’s top associates have secretly pleaded guilty to criminal charges related to the collapse of cryptocurrency exchange FTX.
They are now cooperating with investigators, according to a federal prosecutor.
Mr Bankman-Fried, currently in FBI custody, has now been extradited and flown to the United States from the Bahamas.
Carolyn Ellison, the 28-year-old former CEO of Alameda Research, a trading company set up by Mr Bankman-Fried, and Gary Wang, the 29-year-old who co-founded FTX, have pleaded guilty to charges of wire fraud, securities fraud and commodity fraud.
“They are both cooperating with the Southern District of New York,” U.S. Attorney Damian Williams said in a video statement posted to social media late Wednesday.
He added that anyone else involved in misconduct at FTX or Alameda should contact his office because “our patience is not forever” and further criminal charges against others were possible.
The guilty pleas came as a surprise as Mr Bankman-Fried was en route to the United States ahead of a federal court appearance in New York on Thursday to answer charges related to the FTX failure.
Before Bankman-Fried was airborne, US prosecutors had not publicly disclosed that Ms. Ellison and Mr. Wang faced potential criminal charges or that they had agreed to work with investigators.
It is unclear whether Mr Bankman-Fried, who apologized for FTX’s collapse but denied defrauding anyone, knew of their guilty plea or cooperation.
The two leaders signed plea agreements Dec. 19, in part in return for a promise that prosecutors would recommend a reduction in their sentences if they cooperated fully with the investigation.
Without such an agreement, the couple would risk heavy prison sentences. Ms Ellison, who also faces a money laundering conspiracy charge, could have been sentenced to up to 110 years in prison, and Mr Wang could be sentenced to up to 50 years.
They were both released on $250,000 bail after secret court appearances. They are not permitted to leave the continental United States.
“Gary has accepted responsibility for his actions and takes his obligations as a cooperating witness seriously,” said Mr. Wang’s attorney, Ilan Graff.
A lawyer for Ms Ellison did not immediately return messages seeking comment, The Associated Press reports.
The plea deals are by no means the end of the story for Ms. Ellison and Mr. Wang.
In a parallel civil complaint filed Wednesday, the Securities and Exchange Commission said they were “active participants” in what it said was a scheme by Mr. Bankman-Fried to defraud FTX investors and mislead its clients.
The SEC claims that Mr. Wang created the software code that allowed Alameda to embezzle funds from FTX clients and that Ms. Ellison then used the embezzled funds for Alameda’s business activity.
Mr. Bankman-Fried was arrested last week by Bahamian authorities at the request of the US government. Prosecutors allege he played a central role in FTX’s rapid collapse and hid his problems from the public and investors.
He is accused of illegally embezzling customer deposits on the FTX platform and using them to enable Alameda trading, buying real estate and making huge campaign donations to charities. left-wing American politicians.
At 30, the founder and former CEO of FTX, once worth tens of billions of dollars on paper, faces spending the rest of his life in prison.
Initially denied bail by a Bahamian judge, he was held in Fox Hill Jail in the Bahamas, which has been cited by rights activists as having poor sanitary conditions and being infested with rats and insects.
On Wednesday, Bahamas Attorney General Ryan Pinder said Mr Bankman-Fried had agreed to be transferred to the United States.
He was seen leaving a Nassau Magistrate’s Court in a darkened SUV earlier on Wednesday after he waived his right to challenge the extradition.
Lawyers for Mr. Bankman-Fried will be able to seek his release on bail during his first appearance in US court.
With an estimated net worth of $32 billion on paper, the disgraced fintech CEO has made FTX the second largest cryptocurrency exchange in the world.
He said he did not “knowingly” misuse customer funds and believes his millions of angry customers will eventually be reimbursed for their losses.
However, during a congressional hearing last week, new FTX CEO John Ray III, who is tasked with bankrupting the company and who previously oversaw the aftermath of Enron’s collapse, bluntly disapproved by stating, “We’ll never get all these assets back.
With Associated Press reporting