FTX Co-Founder Avoids Prison Sentence
Date: 2024-11-21 Author: Henry Casey Categories: BUSINESS
FTX, once considered one of the largest exchanges in the market, collapsed in November 2022, causing major upheaval in the cryptocurrency industry. Efforts to revive the company continued until January 2024, but bankruptcy trustees ultimately abandoned the idea.
Sam Bankman-Fried, who served as the exchange’s CEO, was sentenced to 25 years in prison for embezzling customer funds and committing massive fraud. Wang, who met Bankman-Fried while studying at MIT, became FTX’s co-founder and CTO.
Gary Wang faced up to 50 years in prison after pleading guilty to four charges stemming from the FTX collapse. But his cooperation with the prosecution, as well as key evidence presented to the court, have significantly changed the course of the case. Wang detailed financial fraud involving Alameda Research, an FTX-linked fund that accessed $8 billion in client funds on the direct instructions of Bankman-Fried. Prosecutors noted that Wang did not personally use the funds.
Caroline Ellison, who ran Alameda Research, also provided significant evidence. She described how Bankman-Fried pressured her to create false reports for investors, concealing the extent of Alameda’s liabilities to FTX. She also described risky investments that resulted in the loss of client money.
Ellison was sentenced to two years in prison in September, and began serving her sentence in early November. Wang, the last of the key defendants in the case, was awaiting sentencing. However, thanks to the testimony he provided and his cooperation with the authorities, he managed to avoid imprisonment.
