The U.S. Securities and Exchange Commission (SEC) has confirmed multi-year officer and director bans for key former executives of Alameda Research and FTX, marking a significant development in the aftermath of the crypto exchange's collapse. The proposed final consent judgments, filed in the Southern District of New York, target Caroline Ellison, former CEO of Alameda Research, Gary Wang, former FTX Chief Technology Officer, and Nishad Singh, FTX's former co-lead engineer.
The SEC's action aims to hold these individuals accountable for their roles in the events leading to FTX's downfall, which sent shockwaves through the cryptocurrency industry. The agency alleged that between May 2019 and November 2022, FTX and its chief, Sam Bankman-Fried, raised over $1.8 billion from investors by misrepresenting FTX as a secure crypto asset trading platform with sophisticated risk mitigation measures. They also allegedly misled investors by claiming that Alameda Research was just another platform customer without special privileges.
In reality, Alameda allegedly had exemptions from FTX's risk protocols and was granted a virtually unlimited line of credit funded by FTX customer deposits, which it used for various purposes, including trading, venture investments, and loans to Bankman-Fried and other FTX executives. Wang and Singh are accused of creating software code that allowed Alameda Research to divert FTX customer funds.
According to the SEC, without admitting to the allegations, Ellison, Wang, and Singh have consented to the entry of final judgments. These judgments include permanent injunctions against violating antifraud provisions of securities laws and conduct-based injunctions spanning five years. Moreover, Ellison has agreed to a 10-year officer-and-director bar, while Wang and Singh have consented to eight-year bars. These bans would restrict them from serving as officers or directors of any publicly traded company.
Ellison was sentenced to two years in prison in 2024 for her role in the scandal. She had previously pleaded guilty to wire fraud, conspiracy to commit wire fraud, securities fraud conspiracy, and money laundering conspiracy. Wang and Singh also pleaded guilty to charges and cooperated with the government's case against Bankman-Fried and were sentenced to time served.
The SEC's pursuit of officer and director bans underscores its commitment to ensuring accountability at the leadership level. This action sends a clear message that regulators will seek personal consequences for corporate misconduct. The SEC enforcement is not merely punitive but a foundational step toward maturing the cryptocurrency ecosystem. By applying established securities laws, regulators are setting a necessary precedent for governance and accountability in the digital asset space.
