FTX cofounder, Alameda CEO plead guilty to criminal charges as Bankman-Fried enters U.S. custody

Former Alameda Research CEO Caroline Ellison and FTX cofounder Gary Wang on Wednesday pleaded guilty to criminal charges of fraud, federal prosecutors have announced.

Ellison, the ex-lover of FTX founder Sam Bankman-Fried, managed the cryptocurrency platform's sister firm, which had become embroiled in suspicion surrounding transfers of funds from FTX to Alameda after the cryptocurrency company's bankruptcy filings. Both Ellison and Wang are cooperating with prosecutors, according to NBC News.

The Securities and Exchange Commission on Wednesday announced its own civil charges against the pair "for their roles in a multiyear scheme to defraud equity investors in FTX." Wang designed the software code which the SEC alleges enabled the scheme. Both individuals have agreed to settlements with the regulator as well.

News of the pleas comes the same day that Bankman-Fried entered U.S. custody after agreeing to extradition from the Bahamas to face a litany of charges from authorities over the sudden collapse of his cryptocurrency empire.

Formerly a major player in the digital finance world, FTX suffered a rapid collapse in November when investors simultaneously lost faith in the firm's security and attempted to withdraw their stakes, leaving the firm unable to remunerate them fully.

Bankman-Fried entered the custody of U.S. authorities around 7 p.m. on Wednesday, before departing the Bahamas on a flight to New York, where he will likely appear before a judge in the morning, according to the New York Post. Bahamian authorities arrested him earlier in December, and Nassau has contended it will still pursue its own investigations.

Though he has denied any deliberate wrongdoing, the fallen cryptocurrency mogul has admitted that his firm lacked any meaningful risk assessment safeguards to prevent such a disaster.

Since his arrest, new FTX CEO John J. Ray III has testified that the company was devoid of safeguards and that "[t]his is really old-fashioned embezzlement ... This is just taking money from customers and using it for your own purpose. Not sophisticated at all. Sophisticated perhaps in the way they were able to hide it from people."

Bankman-Fried faces charges from both the Department of Justice and the Securities and Exchange Commission on multiple counts, among them defrauding his investors.