Business Partners Turn on Sam Bankman-Fried | CNN Business

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The stunning collapse of one of the most prominent cryptocurrency companies has quickly turned into a legal battle pitting former CEOs and former romantic partners against each other.

Last week, when FTX founder Sam Bankman-Fried was extradited to the US from the Bahamas, two of his former business partners pleaded guilty to multiple counts of fraud and conspiracy.

Caroline Ellison, the 28-year-old former CEO of cryptocurrency hedge fund Alameda, has apologized before a New York federal judge, saying she and her former colleagues knowingly stole billions of dollars from clients of Bankman-Fried’s FTX Exchange and sought to do so. covered it up, according to multiple news reports that cited court transcripts.

“I’m really sorry for what I did,” Ellison told the court. “I knew it was wrong.”

Ellison has been charged with seven felony counts, including conspiracy to commit wire fraud and money laundering. She and Bankman-Fried were close business partners who dated briefly.

Another associate, former FTX chief technology officer Gary Wang, pleaded guilty to four counts to similar charges.

Both Ellison and Wang are cooperating with federal prosecutors, making potentially incriminating witnesses against Bankman-Fried, who has repeatedly denied intentionally defrauding clients and investors.

Bankman-Fried, 30, appeared Thursday in a US courtroom in New York, where a federal judge released him on $250 million bail. He is required to surrender his passport and remain under house arrest at his parents’ home in Palo Alto, California.

Although $250 million is an exceptional amount, Bankman-Fried won’t have to pay it unless he violates the terms of his bail agreement or fails to appear in court. The atypical bail plan was approved as part of his commitment to waive the extradition fight.

After his court appearance, Bankman-Fred Foreman In the business class lounge at New York’s John F. Kennedy International Airport. Crypto reporter Tiffany Fong also tweeted a photo showing Bankman-Fried on an American Airlines flight.

Bankman-Fried’s legal team confirmed to CNN Business that he arrived in Palo Alto and was home with his parents. His lawyer declined to comment on Ellison and Wang’s guilty pleas.

A federal judge said Thursday that Fred Bankman will stand trial on eight felony counts including fraud and conspiracy at an unspecified future date.

Prosecutors allege that Bankman-Fried orchestrated “one of the largest financial frauds in American history,” stealing billions of dollars from FTX clients to cover losses at Alameda and enrich himself. If convicted, he will spend the rest of his life in prison.

Bankman-Fried, prior to his arrest in the Bahamas earlier this month, had sought to portray himself as a down-on-his-luck businessman who went down on his skates. He has repeatedly apologized to customers and FTX employees, saying that he “fed up,” While denying that he has intentionally defrauded anyone.

— CNN’s Cara Scannell contributed to this report.