SBF’s Associate, Caroline Ellison Charged with Criminal Tax Violations

• The former Alameda CEO’s plea deal released on Dec. 21, largely spared her of many of the charges except criminal tax violations.
• Ellison was recently permitted a bail of $250,000, a personal recognizance bond, and was restricted to travel.

Caroline Ellison, the former CEO of Alameda Research, has confessed that she was aware that FTX customer funds were being used to make investments for the venture capital firm.

Ellison, who was also the ex-girlfriend of FTX founder Sam Bankman-Fried, made the admission in a plea agreement filed in the Southern District of New York on December 23rd.

According to the agreement, Ellison knew that Alameda had special privileges on its FTX account that allowed it to maintain negative balances in various fiat currencies and digital assets. This meant that Alameda was essentially borrowing money from FTX’s customers, without having to post collateral or pay interest.

Ellison also admitted that she knew that Bankman-Fried and other FTX executives were using these funds to repay loans worth several billion dollars. She also said that she and Bankman-Fried signed off on “materially misleading financial statements” that hid these activities from FTX investors.

Bankman-Fried is facing eight counts of wire fraud, money laundering, and conspiracy, carrying a maximum sentence of 115 years in prison if he is found guilty. The Securities and Exchange Commission has also charged him with securities violations.

Ellison’s plea agreement states that she will not be further prosecuted criminally, as long as she cooperates with the SDNY’s investigation. However, she could still face criminal tax charges related to the wire and commodity fraud charges.

The agreement does not guarantee that other agencies will not pursue prosecution against Ellison at a later date.

This case is a major blow to the cryptocurrency industry, and it raises serious questions about the transparency and accountability of these exchanges. It is also a reminder that even the most successful and well-known cryptocurrency companies are not immune to fraud and abuse.