FTX: Why Caroline Ellison and Gary Wang Will Not Face New Fines
Not so expensive after all. The Commodity Futures Trading Commission (CFTC) has ended its civil proceedings against Caroline Ellison and Gary Wang, two former executives of the bankrupt FTX empire. The federal court for the Southern District of New York has validated the negotiated orders with the former head of Alameda Research and the co-founder of FTX. The two defendants remain required to cooperate with the U.S. regulator and are also subject to several professional bans, the duration of which takes into account the assistance provided in the investigations into the collapse of FTX. Key points of this article: * The CFTC has ended its civil proceedings against Caroline Ellison and Gary Wang, former FTX executives, after validation by the federal court for the Southern District of New York of the negotiated orders. * They have been banned from trading for five years and from registering with the CFTC, with durations specified according to their cooperation in the investigations into the collapse of FTX. The decision announced by the CFTC prohibits Caroline Ellison and Gary Wang from trading for five years in the markets covered by the orders. Ms. Ellison is also subject to a ten-year registration ban with the CFTC, compared to eight years for Mr. Wang. This registration ban particularly prevents them from performing certain regulated functions or being associated with registered firms during the relevant period. However, these durations do not start in August 2026. They run from the first orders issued on December 23, 2022. Depending on the exact calculation retained by the court, the trading ban should therefore end in December 2027, the registration ban for Gary Wang in December 2030, and for Caroline Ellison in December 2032. The initial decisions had already recognized Ms. Ellison responsible for two counts of fraud brought by the CFTC and Mr. Wang for the count of fraud against him. They also permanently prohibited them from violating the anti-fraud provisions of the Commodity Exchange Act and the associated regulations. The CFTC is not currently seeking any additional restitution, recovery of illicit profits, or civil fines from them. The regulator justifies this position by their cooperation in its investigations and in the parallel criminal proceedings. Both had pleaded guilty to several offenses, including a conspiracy to commit commodity fraud. They subsequently testified against Sam Bankman-Fried, who was convicted of fraud and sentenced to 25 years in prison. However, the absence of new financial penalties does not mean that the two former executives have been exempted from the monetary aspect. The CFTC reminds that there is a criminal order for the confiscation of $11.02 billion, for which both have been declared jointly liable. This wording allows authorities to seek the recovery of the amount from the individuals concerned, without implying that each will personally pay the entire amount. This decision should also be distinguished from the $12.7 billion settlement imposed in 2024 on FTX and Alameda for restitution and recovery of profits. The CFTC's civil proceedings against Caroline Ellison and Gary Wang are now closed, but the two former executives remain required to cooperate with the regulator. Their assistance in the FTX investigations led the agency not to seek new financial penalties. They are still subject to several years of trading and regulatory sector bans. And it is not a high price considering the damage caused by their activities alongside the Mozart of crypto.
-- Price
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