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The Creator of FTX Faces Criminal Accusations Related to Cryptocurrency Fraud

On Wednesday, federal prosecutors stated that two of FTX’s former associates had pled guilty to fraud charges and were collaborating with the government, prompting FTX founder Sam Bankman-Fried to leave the Bahamas for the United States.


Damian Williams announced via Twitter video that Gary Wang, co-founder of FTX, and Caroline Ellison, former CEO of Alameda Research, had pled guilty to misleading investors in the cryptocurrency trading platform.


The strain on Bankman-Fried increased dramatically after it became public that two of his closest former associates had opted to cooperate with the government.


Williams stated that Bankman-Fried is in the custody of the FBI. he is going to the United States, and he invited anyone else involved in the suspected fraud to come forward.



In a second statement released Wednesday night, the U.S. Securities and Exchange Commission (SEC) said it had charged Ellison and Wang for their roles in a multiyear plan to mislead FTX equity investors.


Additionally, the United States Commodity Futures Trading Commission announced that it has brought fraud charges against Ellison and Wang.


Ellison’s lawyer did not immediately reply to a request for comment.


Williams described the alleged theft by Bankman-Fried of billions of dollars in FTX client assets to cover losses at his hedge fund, Alameda Research, “one of the largest financial frauds in American history.” The theft was reported to federal authorities in Manhattan last week.


The 30-year-old crypto tycoon has admitted that there were problems with FTX’s risk management, but he still does not think he is criminally liable.


On Thursday, Bankman-Fried will most likely appear in a federal court in Manhattan, New York. In court, he will have an arraignment where he will be asked to enter a plea. The bail decision and any associated terms would be made by the American judge.


Estonian Couple Charged With $575 Million Cryptocurrency Fraud

Two individuals have been detained by Estonian police on suspicion of orchestrating a $575 million (£485 million) cryptocurrency fraud that claimed thousands of victims.


Sergei Potapenko and Ivan Turogin, two Estonians, are wanted by the US for extradition after Estonian police and the FBI jointly investigated the case.


The two 37-year-olds are accused of convincing individuals to invest in HashFlare, a bitcoin mining service, and Polybius, a phony online bank.


There is a US indictment on file.


According to a statement from the US Department of Justice (DoJ), the two are charged with conspiring to commit money laundering and wire fraud, each of which carries a maximum 20-year prison sentence.


According to the announcement, the defendants have appeared in court in Tallinn, the capital of Estonia, and are being detained pending extradition to the US.


Their reps did not immediately respond with any comments.


The two allegedly misled victims by giving them the opportunity to invest in HashFlare’s bitcoin mining operations, according to the DoJ, which provides specifics of the alleged plan.


Computing power is extensively used during the crypto mining process, which employs computers to create virtual currency for financial gain.


From 2015 to 2019, HashFlare contracts are estimated to have been bought by customers worldwide for more than $500 million. But it’s claimed that the operation exaggerated its powers.


According to the DoJ, victims were also promised dividends if they made investments in Polybius, a virtual bank that Mr. Potapenko and Mr. Turogin claimed they had founded.


The defendants allegedly raised $25 million in this manner, but no bank was ever established.


They purchased at least 75 homes and high-end vehicles using shell businesses designed to launder illegal money, according to the DoJ.


The collaborative investigation, which encompassed 100 individuals, including 15 from the American side, was described as “lengthy and wide” by Oskar Gross of the Estonian police cyber crime branch.

According to him, it was “one of the biggest fraud instances we’ve ever had in Estonia,” the ERR news agency in Estonia said on Monday.


Authorities in the nation also issued a warning, stating that technology had “broadened the possibility of fraud.”


After the failure of FTX, the second-largest cryptocurrency exchange in the world, the lawsuit arises amid increased trepidation in the cryptocurrency sector.


According to a court document, the company filed for bankruptcy in the US last week and owes its 50 top creditors over $3.1 billion (£2.6 billion).