This is a link post for Caroline Ellison’s guilty plea. In addition, the latest from the NY Times is that both her and Gary Wang are co-operating with the federal investigation against Sam Bankman-Fried. Posting here so everyone remains up to date with the progress of this case.




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Wang has agreed to plead guilty as well. [edited to clarify that the information hasn't even been filed yet]

No agreement in the linked doc on recommended sentence; it sounds like USAO is not going to recommend a "specific" sentence at all. The Guidelines sentence will be 110 years but that is rather unlikely to happen. There are ways to cap a defendant's exposure if the prosecution will agree but they were not done here. Then again, she probably had little negotiating power here. They did agree to not oppose fairly generous bail terms at least?

My best guess is that she and Wang are looking at about a decade based on what top lieutenants to big-time scammers like Madoff got. My over/under on SBF is 27.5 years. But lots of uncertainty on both estimates.

Thanks, I appreciate your insights.

This updates me to 90-10 fraud. Sophisticated parties generally don't plead guilty to crimes they did not commit, and both Ellison and Wang are well-represented. I was probably overly optimistic with earlier predictions, perhaps in part due to positive personal interactions with Sam. 

Very sad for everyone involved. 

How would you justify a 10% credence in there not having been massive fraud going on at FTX?

wayne has some ... interesting ... views

I think it's the combination of a very strong prior for mistake + not following the situation especially closely

Props to wayne for providing regular and consistent updates to his beliefs, that's actually pretty amazing

An apparently significant point: the guilty plea + press release from SEC asserts that their part in the fraud began in May 2019 - i.e., the date FTX was founded. 

So, at least in SEC's eyes, FTX was founded as a fraud and has been ever since. Seems the implication for recovery of funds would be that giving/grant date is irrelevant - it is likely to all be viewed as proceeds from fraud.

I think the language used in the plea, such as "between in or about"  and by the SEC "between", matters here, meaning there isn't a clear date of when the fraud started, or at least not that they are stating as of yet.

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I wouldn't reach that much into these standard lawyerisms. Ellison and Wang also pretty much stipulated to the CFTC complaint in a separate document, and wouldn't likely have done so if those dates were materially imprecise -- the duration of the fraud will be, I think, a significant sentencing issue.

Ok, thanks. Retracted my comment since it was just a guess.

TL;DR provided by ABC News:

Ellison pleaded guilty to conspiracy to commit wire fraud on customers of FTX, wire fraud on customers of FTX, conspiracy to commit wire fraud on lenders of Alameda Research and wire fraud on lenders of Alameda Research, conspiracy to commit commodities fraud, conspiracy to commit securities fraud and conspiracy to commit money laundering, according to the court documents.

Together, the seven counts carry a maximum sentence of 110 years in prison.

Wang pleaded guilty to four counts: conspiracy to commit wire fraud on customers of FTX, wire fraud on customers of FTX, conspiracy to commit commodities fraud and conspiracy to commit securities fraud, the court documents stated. He faces up to 50 years in prison.