'FTX fallout' trio reaches settlement with the SEC...up to 10-year restriction on holding executive posts

Doohyun Hwang

Summary

They said that three key executives of the bankrupt virtual asset exchange FTX reached a final settlement in a lawsuit with the U.S. SEC.
They reported that under the agreement, they are restricted from taking executive and director positions at publicly listed companies for up to 10 years, and will also be subject to an order banning certain conduct for five years.
The SEC stated that FTX executives misappropriated customer funds, and said the measure was carried out civilly, separate from criminal penalties.

Three key executives who caused the collapse of the bankrupt virtual asset (cryptocurrency) exchange FTX have reached a final settlement in the lawsuit brought by the U.S. Securities and Exchange Commission (SEC).

On the 19th (local time), according to CoinDesk, the SEC said in a lawsuit notice last Friday that former Alameda Research chief executive officer (CEO) Caroline Ellison, former FTX chief technology officer (CTO) Gary Wang, and former head of engineering Nishad Singh agreed to the proposed sanctions.

Under the proposal, they will be strictly restricted from serving as executives or directors of publicly listed companies going forward. Ellison is barred for 10 years, and Wang and Singh are each barred for 8 years. They will also be subject to a "conduct-based prohibition order" that bans certain acts for five years.

In a statement, the SEC said, "Former FTX CEO Sam Bankman-Fried (SBF) and Wang and Singh excluded Ellison's Alameda Research from risk mitigation measures and provided a virtually unlimited 'overdraft account (Credit Line)' with FTX customer funds." It added, "Wang and Singh wrote software code that could siphon off customer funds to Alameda," and "Ellison exploited this to use it for Alameda's trading activities."

Meanwhile, this settlement with the SEC is a civil action separate from criminal punishment. With SBF, who was convicted on fraud charges in the criminal trial, serving time in a federal prison, the severity of punishment for his accomplices differed.

Ellison was initially sentenced to two years in prison, but according to U.S. federal prison records, she was recently released early. Wang and Singh, who cooperated actively with investigators, avoided prison terms and were given suspended sentences and other penalties.