Proactive Investors - Two formerly close associates of disgraced crypto mogul Sam Bankman-Fried have pleaded guilty to criminal charges relating to the collapse of FTX, formerly the world’s second-largest cryptocurrency exchange.
One half of the pair, Caroline Ellison, was chief executive of FTX's sister company Alameda Research.
As head of Alameda, she is accused of illegally siphoning billions of customer funds out of FTX through a secret ‘backdoor’ mechanism.
These funds went into risky, overleveraged bets that ultimately failed.
Ellison, who was also linked romantically to Bankman-Fried, is now likely to testify against him under a plea bargain for a reduced sentence.
The other half of the pair, Gary Wang, co-founded FTX in 2019 with Bankman-Fried. Wang is accused of developing the software for the backdoor mechanism that allowed Alameda Research to steal funds.
In addition to the criminal charges, both Ellison and Wang face civil penalties from two US regulators– the Securities and Exchange Commission and the Commodities and Futures Trading Commission.
There could be more admissions to come.
Damian Williams, attorney for the Southern District of New York, announced: "If you participated in misconduct at FTX or Alameda, now is the time to get ahead of it. We are moving quickly and our patience is not eternal.
Despite Ellison and Wang pleading guilty, SBF maintains his innocence.
His legal defence will likely pursue a narrative of mismanagement, but with former associates crumbling under pressure around him, that could be a tough sell.