SEC Moves to Bar Ellison, Wang, Singh After FTX Collapse

• SEC filed proposed final judgments against Ellison, Wang and Singh over alleged fraud tied to FTX and Alameda Research.

• Defendants accepted permanent antifraud injunctions and multi-year leadership bans without admitting wrongdoing.

• Allegations include secret code, misuse of customer funds and special privileges granted to Alameda Research.

The U.S. Securities and Exchange Commission has moved to finalize civil penalties against three former FTX leaders tied to the exchange’s collapse. On Friday, the agency said it filed proposed final consent judgments in the Southern District of New York against Caroline Ellison, Gary Wang, and Nishad Singh. The filings address alleged fraud between May 2019 and November 2022, linked to FTX and Alameda Research.

SEC Files Proposed Final Judgments in New York

According to the SEC, the proposed judgments were submitted to the U.S. District Court for the Southern District of New York. The cases involve Caroline Ellison, former CEO of Alameda Research, Gary Wang, former CTO of FTX, and Nishad Singh, former co-lead engineer of FTX.

Notably, the SEC said all three agreed to permanent injunctions against violating federal antifraud laws. These include Section 10(b) of the Securities Exchange Act and Rule 10b-5. They also accepted five-year conduct-based injunctions, subject to court approval.

However, the agency stated the defendants neither admitted nor denied the allegations. The SEC filed the original complaints in December 2022 for Ellison and Wang. It filed Singh’s complaint in February 2023.

Allegations Behind the FTX and Alameda Scheme

The SEC alleged that Sam Bankman-Fried and FTX raised over $1.8 billion through misleading statements to investors. According to the complaints, they portrayed FTX as a safe platform with automated risk controls.

However, the agency said Alameda Research received special privileges, including an unlimited line of credit funded by customer assets. Wang and Singh allegedly wrote software code enabling customer funds to move to Alameda. Ellison allegedly used those funds for Alameda trading activities.

Furthermore, the SEC said hundreds of millions were routed for venture investments and loans. These loans allegedly benefited Bankman-Fried and other executives, including Wang and Singh.

Leadership Bans and Ongoing Legal Process

Under the proposed settlements, Ellison agreed to a 10-year officer-and-director bar. Meanwhile, Wang and Singh agreed to eight-year bars. The SEC confirmed these penalties align with earlier bifurcated settlements.

Additionally, all three defendants faced criminal charges in related cases. Sam Bankman-Fried received nearly 25 years in prison. Singh and Wang received no prison time, while Ellison was sentenced to two years.

The proposed judgments now await approval from Judge James R. Cho, according to the SEC.