SEC v. Caroline Ellison; and Zixiao "Gary" Wang, No. 1:22-cv-10794, Southern District of New York (Dec. 13, 2022) — Complaint

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
___________________________________________
)
SECURITIES            AND                                                               )
EXCHANGE COMMISSION,   )
          )
Plaintiff,   )  Civil Action No.  22-cv-10794
)
v.         )
         ) JURY TRIAL DEMANDED
CAROLINE ELLISON and      )
ZIXIAO            “GARY”            WANG,                                                   )
          )
          )
                                    Defendants.                                       )
___________________________________________ )

COMPLAINT
Plaintiff Securities and Exchange Commission (the “Commission”), for its complaint
against Caroline Ellison (“Ellison”) and Zixiao “Gary” Wang (“Wang,” together with Ellison,
“Defendants”), alleges as follows:
SUMMARY
1. From at least May 2019 through November 2022, Defendants, together with
Samuel Bankman-Fried (“Bankman-Fried”) and others, engaged in a scheme to defraud equity
investors in FTX Trading Ltd. (“FTX”), the crypto asset trading platform of which Bankman-
Fried and Wang were co-founders, at the same time that they were also defrauding the platform’s
customers.
1
  FTX raised more than $1.8 billion from investors, including U.S. investors, who
bought an equity stake in FTX believing that FTX had appropriate controls and risk management
measures.  Unbeknownst to those investors (and to FTX’s trading customers), Bankman-Fried

1
 Bankman-Fried was charged by the Commission on December 13, 2022, in Securities and Exchange Commission
v. Samuel Bankman-Fried, 22-cv-10501 (S.D.N.Y.).  The allegations herein are focused on the conduct and
knowledge of Ellison and Wang, as well as Bankman-Fried.  Other individuals were both aware of and participated
in some aspects of the fraud scheme described herein.

2
was orchestrating a massive, years-long fraud, diverting billions of dollars of the trading
platform’s customer funds for his own personal benefit and to help grow his crypto empire.
Defendants were active participants in the scheme and engaged in conduct that was critical to its
success.
2. Throughout this period, Bankman-Fried portrayed himself as a responsible leader
of the crypto community.  He touted the importance of regulation and accountability.  He told the
public, including investors, that FTX was both innovative and responsible.  Customers around
the world
 believed his lies, and sent billions of dollars to FTX, believing their assets were secure
on the FTX trading platform.  But Bankman-Fried and Wang improperly diverted customer
assets to Alameda Research LLC and its subsidiaries (“Alameda”), the crypto asset hedge fund
that they had founded and co-owned and that Ellison ran.  Wang created and participated in the
creation of the software code that allowed Alameda to divert FTX customer funds.  Ellison, in
turn, used the misappropriated FTX customer funds for Alameda’s trading activity.  And
Bankman-Fried used those customer funds to make undisclosed venture investments, lavish real
estate purchases, and large political donations.
3. Working with Bankman-Fried, Defendants hid the scheme from FTX’s equity
investors, including U.S. investors, from whom FTX sought to raise billions of dollars in
additional funds.  Bankman-Fried repeatedly cast FTX as an innovative and conservative
trailblazer in the crypto markets.  He told investors and prospective investors that FTX had top-
notch, sophisticated automated risk measures in place to protect customer assets, that those assets
were safe and secure, and that Alameda was just another platform customer with no special
privileges.  Defendants knew or were reckless in not knowing that these statements were false
and misleading.  In truth, Bankman-Fried and Wang, with Ellison’s knowledge and consent, had

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exempted Alameda from the risk mitigation measures and had provided Alameda with
significant special treatment on the FTX platform, including a virtually unlimited “line of credit”
funded by the platform’s customers.
4. Beyond its “line of credit” with FTX, Ellison, at Bankman-Fried’s direction,
caused Alameda to borrow billions of dollars from third party lenders.  Those loans were backed
in significant part by Alameda’s holdings of FTT—an illiquid crypto asset security that was
issued by FTX and provided to Alameda at no cost.  Ellison, acting at the direction of Bankman-
Fried, engaged in automated purchases of FTT tokens on various platforms in order to increase
the price of those tokens and inflate the value of Alameda’s collateral, which allowed Alameda
to borrow even more money from external lenders at increased risk to the lenders and to FTX’s
investors and customers, all in furtherance of the scheme.
5. While Bankman-Fried spent lavishly on office space and condominiums in The
Bahamas, and sank billions of dollars of customer funds into speculative venture investments, his
house of cards began to crumble.  When prices of crypto assets plummeted in May 2022,
Alameda’s lenders demanded repayment on billions of dollars of loans.  Despite the fact that
Alameda had, by this point, already taken billions of dollars of FTX customer assets, it was
unable to satisfy its loan obligations.  Bankman-Fried, with Defendants’ knowledge, directed
FTX to divert billions more in customer assets to Alameda to ensure that Alameda maintained its
lending relationships, and that money could continue to flow in from lenders and other investors.
Ellison then used FTX’s customer assets to pay Alameda’s debts.
6. Even as it was increasingly clear that Alameda and FTX could not make
customers whole, Bankman-Fried and Defendants continued to misappropriate FTX customer
funds.  Through the summer of 2022, Bankman-Fried, with Defendants’ knowledge, directed

4
hundreds of millions more in FTX customer funds to Alameda, which he then used for additional
venture investments and for “loans” to himself and other FTX executives, including Wang.  All
the while, Bankman-Fried continued to make misleading statements to investors about FTX’s
financial condition and risk management.  Defendants were aware that Bankman-Fried was
making these statements, and knew or were reckless in not knowing that they were false and
misleading.  Even in November 2022, faced with billions of dollars in customer withdrawal
demands that FTX could not fulfill, Bankman-Fried and Ellison, with Wang’s knowledge, misled
investors from whom they needed money to plug a multi-billion-dollar hole.  This brazen, multi-
year scheme finally came to an end when FTX, Alameda, and their tangled web of affiliated
entities filed for bankruptcy on November 11, 2022.
VIOLATIONS
7. By engaging in the conduct set forth in this Complaint, Defendants violated
Section 17(a)(1) and (3) of the Securities Act of 1933 (“Securities Act”) [15 U.S.C. § 77q(a)(1)
and (3)]; and Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) [15 U.S.C.
§ 78j(b)] and Rule 10b-5(a) and (c) thereunder [17 C.F.R. § 240.10b-5(a) and (c)].
8. Unless Defendants are permanently restrained and enjoined, they will continue to
engage in the acts, practices, transactions and courses of business set forth in this Complaint and
in acts, practices, transactions and courses of business of similar type and object.
NATURE OF THE PROCEEDING AND RELIEF SOUGHT
9. The Commission brings this action pursuant to the authority conferred upon it by
Section 20(b) of the Securities Act [15 U.S.C. § 77t(b)] and Section 21(d)(1) of the Exchange
Act [15 U.S.C. §§ 78u(d)(1)].
10. The Commission seeks a final judgment:  (i) permanently enjoining Defendants

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from engaging in the acts, practices, transactions and courses of business alleged herein;
(ii) ordering Defendants to disgorge their ill-gotten gains and to pay prejudgment interest thereon
pursuant to Section 21(d)(5) and (7) of the Exchange Act [15 U.S.C. §§ 78u(d)(5) and (7)]; (iii)
imposing civil money penalties on Defendants pursuant to Section 20(d) of the Securities Act [15
U.S.C. § 77t(d)] and Section 21(d)(3) of the Exchange Act [15 U.S.C. § 78u(d)(3)];
(iv) imposing an officer and director bar on each Defendant pursuant to Section 20(e) of the
Securities Act [15 U.S.C. § 77t(e)] and Section 21(d)(2) of the Exchange Act [15 U.S.C.
§ 78u(d)(2)]; (v) prohibiting Defendants from participating in the offer or sale of securities
including crypto asset securities pursuant to Section 21(d)(5) of the Exchange Act [15 U.S.C.
§ 78u(d)(5)]; and (vi) ordering such other and further relief the Court may find appropriate
pursuant to Section 21(d)(5) of the Exchange Act [15 U.S.C. § 78u(d)(5)].
JURISDICTION AND VENUE
11. This Court has jurisdiction over this action pursuant to Sections 20(b), 20(d) and
22 of the Securities Act [15 U.S.C. §§ 77t(b), 77t(d), and 77v], and Sections 21(d), 21(e), and 27
of the Exchange Act [15 U.S.C. §§ 78u(d), 78u(e), and 78aa].  In connection with the conduct
alleged in this Complaint, Defendants, directly or indirectly, made use of the means or
instruments of transportation or communication in, and the means or instrumentalities of,
interstate commerce, or of the mails.
12. Venue is proper in the Southern District of New York pursuant to Section 22(a) of
the Securities Act [15 U.S.C. § 77v(a)], and Section 27 of the Exchange Act [15 U.S.C. § 78aa].
Among other acts, false and misleading statements that were part of the fraudulent scheme
alleged herein were made to investors residing in this District.

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DEFENDANTS
13. Caroline Ellison (“Ellison”), age 28, was employed at Alameda beginning in or
around March 2018.  Ellison was the co-CEO at Alameda from in or around October 2021 to in
or around August 2022, when she became the sole CEO.
2
  Ellison’s employment at Alameda was
terminated on or about November 18, 2022.  Ellison, a United States citizen, resided in Hong
Kong and The Bahamas during the relevant period.
14. Zixiao “Gary” Wang (“Wang”), age 29, was a co-founder and the Chief
Technology Officer of FTX and co-founder and 10% owner of Alameda.  Wang’s employment
at FTX was terminated on or about November 18, 2022.  During the relevant period, Wang, a
United States citizen, resided in Hong Kong and The Bahamas.
RELEVANT PARTIES AND ENTITIES
15. Samuel Bankman-Fried (“Bankman-Fried”), age 30, was a co-founder and
majority owner of FTX and, prior to stepping down on November 11, 2022, its CEO.  He was
also a co-founder and majority owner of Alameda.  He resided in Hong Kong and The Bahamas.
16. FTX Trading Ltd. (d/b/a FTX.com) (“FTX”) is an Antigua and Barbuda
limited corporation.  FTX’s principal place of business was in Hong Kong and The Bahamas.
FTX operated a global crypto asset trading platform and began operations in or around May
2019.  FTX was available to customers in most countries, but was not permitted to provide
services to customers in the United States and several other countries.  FTX was founded by
Bankman-Fried, Wang, and Nishad Singh (“Singh”).  On or about November 11, 2022, FTX and
certain of its affiliates filed Chapter 11 bankruptcy petitions in the United States Bankruptcy
Court for the District of Delaware, Case No. 22-11068 (Bankr. Del.).

2
 Ellison served as CEO of Alameda Research Ltd., a subsidiary of Alameda Research LLC.  For clarity, as set forth
in paragraph 17, the complaint refers to Alameda Research LLC and its subsidiaries collectively as “Alameda.”

7
17. Alameda Research LLC is a Delaware company that had operations in the
United States, Hong Kong, and The Bahamas.  Alameda Research LLC and its subsidiaries,
including Alameda Research Ltd., are collectively referred to herein as “Alameda.”  Alameda
was a quantitative trading firm specializing in crypto assets (a “crypto hedge fund”).  Bankman-
Fried and Wang co-founded Alameda in or around October 2017, and, prior to Alameda’s
bankruptcy filing, had been its sole equity owners, with Bankman-Fried owning 90%, and Wang
owning 10%, of the company.  Bankman-Fried was CEO of Alameda from its inception until in
or around October 2021, at which time Ellison and Sam Trabucco (“Trabucco”) became co-
CEOs.  In or around August 2022, Ellison became the sole CEO.  Alameda has filed for Chapter
11 bankruptcy in the United States Bankruptcy Court for the District of Delaware, Case No. 22-
11068 (Bankr. Del.).
FACTS
A. Bankman-Fried, Actively Supported by Defendants, Created a Complex Web
of Entities, with FTX and Alameda at Its Center.
18. In or around October 2017, Bankman-Fried and Wang founded Alameda, a
quantitative trading firm specializing in crypto assets.
3

19. At inception, Alameda was focused on arbitrage trading strategies, but went on to
employ other strategies including market making, yield farming (pooling of crypto assets in
exchange for interest or other rewards), and volatility trading.  Alameda also offered over-the-
counter trading services, and made and managed other debt and equity investments.
20. At first, Bankman-Fried was responsible for trading operations, and Wang

3
 Crypto assets are unique digital assets maintained on a cryptographically-secured blockchain.  A blockchain or
distributed ledger is a peer-to-peer database spread across a network of computers that records all transactions in
theoretically unchangeable, digitally recorded data packages. The system relies on cryptographic techniques for
secure recording of transactions.  Crypto tokens may be traded on crypto asset trading platforms in exchange for
other crypto assets or fiat currency (legal tender issued by a country).

8
handled the engineering and programming functions.  Over time, Alameda hired additional
employees, including Singh (in or around December 2017), Ellison (in or around March 2018),
and Trabucco (in or around 2019).  By the end of 2021, Alameda had approximately 30
employees.  At times, Alameda shared office space and employees with FTX.
21. Bankman-Fried remained the ultimate decision-maker at Alameda, even after
Ellison and Trabucco became co-CEOs in or around October 2021.  Bankman-Fried directed
investment and operational decisions, frequently communicated with Alameda employees, and
had full access to Alameda’s records and databases.
22. Ellison was a trader at Alameda during the time Bankman-Fried acted as CEO.
When Ellison became co-CEO in 2021, and continuing through November 2022, Ellison was
responsible for Alameda’s day-to-day operations.  Though Ellison made some trading decisions,
she frequently consulted with Bankman-Fried, particularly about strategic issues and significant
trades.
23. In or around 2018, Bankman-Fried began work on building a crypto asset trading
platform.  Together with Wang and Singh, Bankman-Fried ultimately founded FTX, which
began operations in or around May 2019.
24. FTX offered its customers a number of services.  For example:
a. FTX offered a “spot market,” a trading platform through which customers
could trade crypto assets with other FTX customers in exchange for fiat
currency (i.e., currency such as U.S. Dollars) or other crypto assets.
b. FTX offered “spot margin trading” services, which allowed FTX
customers to trade using assets they did not have (i.e., to trade “on
margin”) by posting collateral in their FTX accounts and borrowing crypto

9
assets through the “spot market” on the FTX platform.  FTX also allowed
customers to lend their crypto assets to other FTX customers who would
then use those crypto assets to spot trade.
c. FTX offered an off-platform (over-the-counter or “OTC”) portal that
enabled customers to connect and request quotes for spot crypto assets and
to conduct trades.
25. Bankman-Fried was the ultimate decision-maker at FTX from the platform’s
inception in or around May 2019 until he resigned as CEO on or about November 11, 2022 (“the
Relevant Period”).  Wang and Singh were the lead engineers responsible for writing the software
code for FTX, including the code that allowed for the services described above.
26. In or around January 2020, Bankman-Fried, Wang, and Singh founded FTX US, a
crypto asset trading platform designed primarily for customers in the United States.
4

27. Over time, Bankman-Fried expanded his holdings to include a number of
companies focused on making and managing private (or “venture”) investments.
28. This interconnected web of companies grew to include over 100 separate entities,
with Bankman-Fried at the top and Alameda, his crypto hedge fund, at the center.
29. Throughout the Relevant Period, in multiple public statements, Bankman-Fried
held himself out as a visionary leader in the crypto industry, and touted his efforts to create a
regulated and thriving crypto asset market.  He conducted an intensive public relations campaign
to brand himself and his companies as honest stewards of crypto.
30. The reality was very different:  From the start, contrary to what FTX investors
and trading customers were told, Bankman-Fried, actively supported by Defendants, continually

4
 FTX US is the d/b/a for a subsidiary of West Realm Shires Inc., a separate legal entity from FTX Trading Ltd. that
provided different services.  FTX US’s conduct is not the subject of the allegations in this complaint.

10
diverted FTX customer funds to Alameda and then used those funds to continue to grow his
empire, using billions of dollars to make undisclosed private venture investments, political
contributions, and real estate purchases.
31. At the same time, throughout the Relevant Period, Bankman-Fried, with
Defendants’ knowledge, solicited equity investors by touting FTX’s controls and risk
management, ultimately raising at least $1.8 billion from investors in exchange for various
classes of stock in FTX through multiple fundraising rounds, including raising:  (1)
approximately $8 million from the sale of shares of FTX Series A preferred stock, with
fundraising completed in or around August 2019; (2) approximately $1 billion from the sale of
shares of FTX Series B preferred stock, with fundraising completed in or around July 2021; (3)
approximately $420 million from the sale of shares of FTX Series B-1 stock, with fundraising
completed in or around October 2021; and (4) approximately $500 million from the sale of
shares of FTX Series C stock, with fundraising completed in or around January 2022.  Of this
total, approximately $1.1 billion was invested in FTX by approximately 90 investors based in the
United States.
32. For the entire span of the Relevant Period, while raising money from equity
investors, Bankman-Fried, and those speaking at his direction and on his behalf, with the
knowledge of Defendants, claimed in widely distributed public forums and directly to investors
that:  FTX was a safe crypto asset trading platform; FTX had a comparative advantage due to its
automated risk mitigation procedures; and FTX and its customers were protected from other
customers’ losses due to FTX’s automated liquidation process.  As discussed further herein,
these statements and others were misleading in light of Bankman-Fried’s failure to disclose to
FTX investors the diversion of FTX customer funds to Alameda, which he then used for his own

11
purposes, including loans to himself.  Similarly, Bankman-Fried’s statements concerning the
separation of FTX and Alameda, made throughout the Relevant Period, were misleading because
he did not disclose the special treatment afforded to Alameda on FTX, including its virtually
unlimited “line of credit” at FTX, its ability to carry a negative balance in its FTX customer
account, and its exemption from FTX’s automated liquidation process—none of which any other
customer of the platform enjoyed, but which changed the risk profile of FTX.  Defendants were
aware that Bankman-Fried was making false or misleading statements in order to raise money for
FTX from equity investors.  At times, they were in close proximity to these discussions, and
directly or indirectly supported Bankman-Fried in providing false and misleading information to
investors.
33. Bankman-Fried also misrepresented the risk profile of investing in FTX
throughout the Relevant Period by failing to disclose FTX’s exposure to Alameda and, relatedly,
that the collateral Alameda deposited on FTX consisted largely of illiquid, FTX-affiliated tokens,
including FTT, the price of which Alameda was actively manipulating.  In addition to these
material omissions, Bankman-Fried also made material misrepresentations to FTX investors
about FTX’s risk management and its relationship with Alameda.  As detailed below, Bankman-
Fried made these material misstatements throughout the Relevant Period, and the entire time he
was raising or attempting to raise funds for FTX—from the time FTX began operations in May
2019 through its ultimate demise in November 2022.  Again, Defendants were aware that
Bankman-Fried was making these false or misleading statements and that he was doing so in
order to raise money from equity investors, and they directly or indirectly supported him in doing
so.
B. Defendants Used Alameda to Carry Out the Fraudulent Scheme.
34. Alameda (and its many subsidiaries) served a number of essential functions in

12
Bankman-Fried’s growing web of companies. For example, Alameda was the primary market
maker on FTX at the time of FTX’s inception in 2019.  In this capacity, Alameda, at Bankman-
Fried’s direction, was tasked with creating liquidity on FTX to allow the platform to function
more efficiently.  Bankman-Fried also made venture investments through an Alameda
subsidiary.  Most crucially, Bankman-Fried used Alameda to house FTX customer assets and to
deploy those assets, under Bankman-Fried’s direction, to help grow his empire.
35. From the inception of FTX, Defendants and Bankman-Fried diverted FTX
customer funds to Alameda, and continued to do so until FTX’s collapse in November 2022.
36. Defendants and Bankman-Fried diverted FTX customer funds to Alameda in
essentially two ways:  (1) by directing FTX customers to deposit fiat currency (e.g., U.S.
Dollars) into bank accounts controlled by Alameda; and (2) by enabling Alameda to draw down
from a virtually limitless “line of credit” at FTX, which was funded by FTX customer assets.
37. As a result, there was no meaningful distinction between FTX customer funds and
Alameda’s own funds.  Bankman-Fried and Wang thus gave Alameda and Ellison carte blanche
to use FTX customer assets for Alameda’s trading operations and for whatever other purposes
Bankman-Fried and Ellison saw fit.  In essence, Bankman-Fried and Wang placed billions of
dollars of FTX customer funds into Alameda.  Bankman-Fried then used Alameda as his
personal piggy bank to buy luxury condominiums, support political campaigns, and make private
investments, among other uses.  Ellison used these funds for Alameda’s operations, including
speculative trading strategies and servicing Alameda’s debt to third-party lenders.  Defendants
knew that none of this was disclosed to FTX equity investors or to the platform’s trading
customers.

13
i. FTX Customers Deposited Billions of Dollars into Alameda-Owned
Bank Accounts, Which Alameda Spent on Its Own Trading Operations
and to Expand Bankman-Fried’s Empire.
38. From the start of FTX’s operations in or around May 2019 until at least 2021,
FTX customers deposited fiat currency (e.g., U.S. Dollars) into bank accounts controlled by
Alameda.  Billions of dollars of FTX customer funds were so deposited into Alameda-controlled
bank accounts.  Ellison was aware that Alameda was receiving FTX customer funds.
39. At least some of these bank accounts were not in Alameda’s name, but rather in
the name of North Dimension Inc. (“North Dimension”), an Alameda subsidiary.  North
Dimension’s website does not disclose any connection to Alameda.  Ellison knew that Bankman-
Fried had directed FTX to have customers send funds to North Dimension in an effort to hide the
fact that the funds were being sent to an account controlled by Alameda.
40. Alameda did not segregate these customer funds, but instead commingled them
with its other assets, and used them indiscriminately to fund its trading operations and Bankman-
Fried’s other ventures.
41. This multi-billion-dollar liability was reflected in an internal account in the FTX
database that was not tied to Alameda but was instead called “[email protected].”  Characterizing the
amount of customer funds sent to Alameda as an internal FTX account had the effect of
concealing Alameda’s liability in FTX’s internal systems.  Defendants knew that FTX customer
funds were being sent to Alameda-controlled bank accounts and that Alameda’s liability was
reflected in the “[email protected]” account.
42. In quarterly balance sheets that Ellison prepared, and that were provided to
Alameda’s third-party lenders, Alameda tracked this liability as a “loan,” but did not specify that
the “loan” was from FTX.  Instead, Ellison, at Bankman-Fried’s direction, combined this liability
with loans Alameda had received from third-party lenders to obscure Alameda’s intertwined

14
financial relationship with FTX.
43. Alameda was not required to pay interest on the liability reflected in the
“[email protected]” account.
44. In 2022, FTX began trying to separate Alameda’s portion of the liability in the
“[email protected]” account from the portion that was attributable to FTX (i.e., to separate out
customer deposits sent to Alameda-controlled bank accounts from deposits sent to FTX-
controlled bank accounts).  Alameda’s portion—which amounted to more than $8 billion in FTX
customer assets that had been deposited into Alameda-controlled bank accounts—was initially
moved to a different account in the FTX database.  However, because this change caused FTX’s
internal systems to automatically charge Alameda interest on the more than $8 billion liability,
Bankman-Fried directed that the Alameda liability be moved to an account that would not be
charged interest.  This account was associated with an individual that had no apparent connection
to Alameda.  As a result, this change had the effect of further concealing Alameda’s liability in
FTX’s internal systems.
ii. The FTX Platform, By Design, Granted Special Treatment to Alameda,
Including Features that Allowed Alameda to Divert FTX Customer
Assets.
45. In addition to receiving cash deposits directly from FTX customers, Alameda
benefited from undisclosed features of the FTX platform, which were embedded in software
code developed by Wang and other FTX engineers, and which allowed Alameda to divert FTX
customer assets.  For example:
a. Negative Balance:  Alameda was able to maintain a negative balance in its
customer account at FTX.  Bankman-Fried directed FTX engineers, including
Wang, to write software code in or around August 2019, and to update it in or
around May 2020, ultimately allowing Alameda to maintain a negative balance in

15
its account, untethered from any collateral requirements.  No other customer
account at FTX was permitted to maintain a negative balance.
b. Line of Credit:  On multiple occasions, Bankman-Fried directed FTX engineers,
including Wang, to increase the amount by which Alameda could maintain a
negative balance in its account.  In effect, this gave an unofficial “line of credit”
to Alameda, since Alameda was able to draw down on its FTX customer account
and use those funds—which were actually the funds deposited by other FTX
customers—for its own trading.  At Bankman-Fried’s direction, Wang and others
continually raised the limit on Alameda’s “line of credit” to the point where it
grew to tens of billions of dollars and effectively became limitless.  No other FTX
customer had a similar “line of credit.”
c. Liquidation Exemption:  In or around May 2020, Bankman-Fried directed FTX
engineers, including Wang, to exempt Alameda from the “auto-liquidation”
feature of FTX’s spot margin trading services.  As a result, Alameda’s collateral
could fall below the requisite margin levels without triggering the automatic
liquidation of its account.  Alameda was the only customer exempted from FTX’s
automatic account liquidation.
46. Defendants were both aware that these special privileges were afforded to
Alameda—and only Alameda.  Defendants were also both aware that the existence of these
special privileges, which were put in place at Bankman-Fried’s direction, were hidden from
FTX’s investors.  These privileges permitted Alameda to draw on FTX customer assets to a
virtually unlimited extent for its own uses.  Because its own FTX trading account was able to
maintain a negative balance of billions of dollars, unbacked by sufficient collateral—as a direct

16
result of software code implemented by Wang and others—Alameda was able to divert billions
of dollars in FTX customer assets.  Alameda and Ellison did just that in 2022.
iii. In 2022, Alameda Diverted Billions More in FTX Customer Assets.
47. Starting in or around 2021, Bankman-Fried directed Ellison to have Alameda
borrow billions of dollars from third-party crypto asset lending firms in order to fund Bankman-
Fried’s venture investments and for his personal use.  Certain of these loans included provisions
permitting the lenders to demand re-payment at any time.
48. In or around May 2022, as prices of crypto assets were dropping precipitously,
several of these lenders demanded re-payment from Alameda.  Because Alameda did not have
sufficient assets to cover all of these obligations, Bankman-Fried directed Ellison to draw on
Alameda’s “line of credit” from FTX, which, based on the software code that Wang had
previously created, allowed Alameda to borrow virtually limitless funds from FTX.  Billions of
dollars of FTX customer funds were thus diverted to Alameda and used by Alameda to re-pay its
third-party loan obligations.
49. Because Alameda now had billions of dollars more in liability to FTX (on top of
the billions of dollars reflected in the “[email protected]” account), Bankman-Fried—concerned that
this enormous liability would alarm Alameda’s lenders—directed Ellison to hide this “line of
credit” in Alameda’s balance sheet.  Ellison did so and presented this information to lenders,
knowing that it was materially misleading.
50. Despite the fact that Alameda now owed FTX billions of dollars with no
immediate prospects of raising capital to pay off its “line of credit,” Bankman-Fried continued to
direct Ellison to draw on the Alameda “line of credit” in the summer of 2022.  The customer
funds diverted to Alameda were used, among other things, to provide hundreds of millions of
dollars in “loans” to Bankman-Fried and other FTX executives, as well as hundreds of millions

17
more to fund additional venture investments.
iv. Bankman-Fried, with Defendants’ Knowledge and Consent, Assured
Investors that FTX Customer Assets Were Secure, and Hid Alameda’s
Close Relationship with FTX.
51. Throughout the Relevant Period, Bankman-Fried was directly involved in
soliciting potential investors in FTX.  Bankman-Fried met, and otherwise communicated, with
FTX investors, including investors based in the United States.  Along with another FTX
employee, Bankman-Fried was the point-person for investor relations at FTX.  Defendants knew
that Bankman-Fried was meeting with and soliciting funds from equity investors.
52. FTX’s Terms of Service, which were publicly available on FTX’s website and
accessible to investors, assured FTX customers that their assets were secure, providing:  “you
control the Digital Assets held in your Account;” “[t]itle to your Digital Assets shall at all times
remain with you and shall not transfer to FTX;” and “none of the digital assets in your account
are the property of, or shall or may be loaned to, FTX Trading.”  The Terms of Service further
provided:  “Once we receive fiat currency we may issue you an equivalent amount of electronic
money (“E-Money”)...which represents the fiat currency that you have loaded” and “[y]ou may
redeem all or part of any E-Money held in your Account at any time.”
53. Similarly, FTX posted on its website a document entitled, “FTX’s Key Principles
for Ensuring Investor Protections on Digital-Asset Platforms,” in which FTX represented that it
“segregates customer assets from its own assets across our platforms.”  FTX further represented
in that document that it maintained “liquid assets for customer withdrawals...[to] ensure a
customer without losses can redeem its assets from the platform on demand.”
54. In addition to making this document available to the public on its website, FTX
specifically provided it to potential investors, including a U.S. investor who had invested $35
million in FTX’s Series B fundraising round in July 2021.  As described above, these statements

18
to the public, customers, and investors were false—FTX did not segregate its customer assets
from its own assets, and, as events would later demonstrate, did not maintain liquidity to allow
customer withdrawals on demand.
55. FTX investors were provided with FTX’s audited financial statements, and FTX
represented in its purchase agreements that those financial statements “fairly present in all
material respects the financial condition and operating results of” FTX.  These audited financial
statements, which do not include information about Alameda’s undocumented “line of credit”
from FTX and other information discussed herein, were, at the very least, materially misleading.
Indeed, FTX’s current CEO has voiced “substantial concern as to the information presented in
these audited financial statements.”
56. Throughout the Relevant Period, Bankman-Fried made public statements assuring
that customer assets were safe at FTX.  For example, he stated in a tweet on or about June 27,
2022:  “Backstopping customer assets should always be primary.  Everything else is secondary.”
He likewise tweeted on or about August 9, 2021:  “As always, our users’ funds and safety comes
first.  We will always allow withdrawals (except in cases of suspected money
laundering/theft/etc.).”
57. Bankman-Fried also told investors, and directed other FTX and Alameda
employees to tell investors, that Alameda received no preferential treatment from FTX.  For
example, Bankman-Fried told the Wall Street Journal in or around July 2022:  “There are no
parties that have privileged access.”  Likewise, in a Bloomberg article published in or about
September 2022, Bankman-Fried claimed that “Alameda is a wholly separate entity” than FTX.
In the same article, Ellison is quoted as stating about Alameda:  “We’re at arm’s length and don’t
get any different treatment from other market makers.”  Similarly, in an interview in or about

19
August 2022, Ellison claimed that FTX and Alameda were separate companies, that Alameda
received no special treatment on the FTX platform, and that there was an ethical wall between
them preventing sharing of customer information between FTX and Alameda.  Bankman-Fried
made similar statements directly to investors.
58. Defendants were aware of the substance of Bankman-Fried’s statements about
FTX customer assets—including the security of the assets and the manner in which they would
be handled—and about the relationship between Alameda and FTX.  Given their involvement in
the fraudulent scheme outlined herein, Defendants knew or were reckless in not knowing that
these statements to investors were false and misleading and that they were important to FTX’s
investors.  Defendants further knew or were reckless in not knowing that these statements were
intended to make FTX more attractive to investors and potential investors.
C. Defendants Knew that FTX Had Poor Controls and Deeply Inadequate Risk
Management Procedures, in Stark Contrast to Bankman-Fried’s Claims that
It Was a Mature, Conservative Company.
59.  From its inception, FTX had poor controls and fundamentally deficient risk
management procedures.  Assets and liabilities of all forms were generally treated as
interchangeable, and there were insufficient distinctions between the assignment of debts and
credits to Alameda, FTX, and executives, including Bankman-Fried, Wang, and Singh.  This
reality was a sharp contrast to the image of FTX that Bankman-Fried consistently portrayed to
the public and to investors—a mature company that managed funds and risk in a conservative,
rigorous manner.
60. FTX invested significant resources to develop and promote its brand as a
trustworthy company.  For example, in materials provided to one investor in or around June
2022, FTX cultivated and promoted its reputation:
FTX has an industry-leading brand, endorsed by some of the most

20
trustworthy public figures, including Tom Brady, MLB, Gisele
Bundchen, Steph Curry, and the Miami Heat, and backed by an
industry-leading set of investors.  FTX has the cleanest brand in
crypto.

61. FTX also promoted itself as a company that was willing to work collaboratively
with regulators and lawmakers.  In the same materials, FTX claimed:  “FTX is also the only
major digital asset venue to maintain positive, constructive relationships with regulators and
lawmakers.”
62. Defendants knew or were reckless in not knowing that the reality was far different
than what Bankman-Fried presented to FTX’s investors and customers.
i. The FTX Automated Risk Engine
63. Bankman-Fried repeatedly touted FTX’s automated risk mitigation protocols—
which he called FTX’s “risk engine”—to the public, and prospective investors, as a safe and
reliable way for crypto asset trading platforms to manage risk.  FTX engineers, led by Wang,
developed the software code that created the “risk engine.”  In essence, the software code
implemented a series of rules that were designed to reduce risk in any individual client’s account
by automatically triggering certain actions (e.g., to sell collateral in an account when an account
was overly extended).
64. Bankman-Fried promoted the concept of “24/7” automated risk monitoring as an
innovative benefit of crypto asset markets, including at a hearing on or about December 8, 2021,
to the U.S. House of Representatives Committee on Financial Services, where Bankman-Fried
concluded his remarks by stating:
And the last thing I will say is if you look at what precipitated
some of the 2008 financial crisis, you will see a number of
bilateral, bespoke, non-reported transactions happening between
financial counterparties, which then got repackaged and
releveraged again and again and again, such that no one knew how
much risk was in that system until it all fell apart.  If you compare

21
that to what happened on FTX or other major cryptocurrencies in
use today, there is complete transparency about the full open
interest.  There is complete transparency about the positions that
are held.  There is a robust, consistent risk framework applied.

65. In addition to generally promoting the benefits of automated risk engines,
Bankman-Fried repeatedly claimed that FTX’s own risk engine was especially sophisticated and
carefully calibrated.  In a submission to the Commodity Futures Trading Commission, FTX
touted its automated system, claiming that it calculated a customer’s margin level every 30
seconds; and that if the collateral on deposit fell below the required margin level, FTX’s
automated system would sell the customer’s portfolio assets until the collateral on deposit
exceeded the required margin level.
66. These statements were materially false and misleading because of a critical
omission:  Bankman-Fried did not reveal that the automatic risk engine did not apply to the
accounts of its most important customer—Alameda.  As discussed above, Wang and other FTX
engineers—as part of Defendants’ and Bankman-Fried’s fraudulent scheme—had created a
special feature in the software code to exempt Alameda from the rules of the “risk engine.”  This
was a critical special benefit that Bankman-Fried afforded Alameda:  Alameda’s collateral on
deposit was allowed to fall below FTX’s required margin level without FTX liquidating any part
of Alameda’s portfolio.  Ellison was aware of, and took advantage of, this special undisclosed
benefit.
67. Defendants knew, or were reckless in not knowing, that Bankman-Fried’s
statements regarding FTX’s risk engine misled FTX’s investors by representing that its risk
engine would protect FTX customer funds and would limit FTX’s exposure to any single
customer, while failing to disclose that Bankman-Fried had directed Wang to ensure that the
engine not apply to one of its largest customers.

22
68. As Bankman-Fried acknowledged in a network television interview on or about
December 1, 2022:  “I wasn’t even trying, like, I wasn’t spending any time or effort trying to
manage risk on FTX.”  Bankman-Fried continued:  “What happened, happened—and, if I had
been spending an hour a day thinking about risk management on FTX, I don’t think that would
have happened.”
ii. The Valuation of Alameda’s Collateral
69. The collateral that Alameda had on deposit, consisting largely of enormous
positions in illiquid crypto assets issued by FTX and Bankman-Fried (including the “FTT” token,
the “exchange token” for FTX, as described below), compounded the undisclosed risk to FTX’s
investors.
a. Alameda Overvalued Its Collateral by Ignoring Significant Liquidity
Issues.
70. Defendants and Bankman-Fried valued the FTX-affiliated tokens at trading
prices, but the collateral deposited by Alameda was not worth the value assigned to it.  Alameda
and FTX collectively owned the majority of these tokens, and only a small portion of the FTX-
affiliated tokens were in circulation.  As such, the tokens were illiquid, and, as Defendants and
Bankman-Fried knew or were reckless in not knowing, if Alameda or FTX tried to sell
Alameda’s holdings, market prices for the tokens would fall, thereby driving down the value of
Alameda’s deposited collateral at FTX.  As a result, even if FTX had liquidated Alameda’s
portfolio, the sales of those thinly traded tokens would not have generated sufficient funds to
cover the amount Alameda borrowed from FTX.
71. Defendants and Bankman-Fried were well aware of the impact of Alameda’s
positions on FTX’s risk profile.  On or about October 12, 2022, for example, Bankman-Fried, in
a series of tweets, analyzed the manipulation of a digital asset on an unrelated crypto platform.

23
In explaining what occurred, Bankman-Fried distinguished between an asset’s “current price”
and its “fair price,” and recognized that “large positions – especially in illiquid tokens – can have
a lot of impact.”  Bankman-Fried asserted that FTX’s risk engine required customers to “fully
collateralize a position” when the customer’s position is “large and illiquid enough.”  But
Bankman-Fried knew, or was reckless in not knowing, that by not mitigating for the impact of
large and illiquid tokens posted as collateral by Alameda, FTX was engaging in precisely the
same conduct, and creating the same risk, that he was warning against.  Defendants too knew
that Alameda was drawing down on a virtually unlimited line of credit from FTX, collateralized
by what they knew or were reckless in not knowing was a large illiquid position.
72. The reality of FTX’s exposure to the risk created by the valuation of Alameda’s
positions stood in stark contrast to Bankman-Fried’s assertions about risk management at FTX in
his October 2022 Twitter analysis, in which he described FTX’s approach and claimed that
constructing the rules for FTX’s risk engine in a manner that is “conservative, and handles
apparent large moves gracefully” is “probably the most important thing we do at FTX.”
Bankman-Fried further claimed, contrasting FTX to the failed endeavor:  “There are a bunch of
other risk engine protection and sanity checks, too, which would have caught something like
this.”
73. Not only did Bankman-Fried fail to tell investors that he had exempted Alameda
from FTX’s risk engine, he also falsely told certain investors that FTX had no exposure to FTT
at all.  In late summer 2021, for example, Bankman-Fried told a potential U.S. investor in FTX’s
series B fundraising round that FTX did not hold FTT and, consequently, the investor would not
have any exposure to FTT.  The investor ultimately invested $30 million.  For the reasons
described above, Defendants and Bankman-Fried knew or were reckless in not knowing that at

24
the time that Bankman-Fried made those representations, they were false and misleading.
Specifically, Defendants and Bankman-Fried knew or were reckless in not knowing that any
investment in FTX carried significant exposure to FTT, as the token was, among other things,
posted as collateral for billions of dollars that FTX had loaned to Alameda to engage in
speculative investments.
b. Alameda Manipulated the Market Price of FTT and, as a Result, Further
Inflated the Value of Its Collateral.
74. Ellison, at Bankman-Fried’s direction, caused Alameda to manipulate the price of
FTT by purchasing large quantities of FTT on the open market to prop up its price.  This
manipulative activity was in furtherance of Defendants’ scheme because it allowed Ellison and
Alameda to engage in further borrowing, while concealing Alameda’s true risk exposure.
1. FTT Was Offered and Sold as an Investment Contract and,
Therefore, as a Security.
75. On or about July 29, 2019, FTX launched a crypto asset known as “FTT.”
5
  FTX
launched FTT as an “exchange token” for the FTX platform (i.e., the crypto asset or token
associated with a crypto trading platform).
76. Before launching the FTX platform in or around May 2019, FTX had minted 350
million FTT tokens in or around April 2019.  Of the 350 million tokens minted, 175 million were
allocated to FTX as “company tokens,” and 175 million were designated as non-company
tokens.  The company tokens were set to “unlock” (or become available for trading) over a three-
year period after a so-called initial exchange offering (“IEO”) of the token.
77. From the time of its offering, FTT was offered and sold as an investment contract
and therefore a security.

5
 FTT was available for trading on FTX, but not on FTX US.

25
78. Of the 175 million non-company tokens, FTX offered and sold approximately 73
million FTT in so-called “pre-sales” to investors, at prices ranging from $0.10 to $0.80.  FTX
raised approximately $10 million from these sales of FTT prior to the IEO.  The pre-sale tokens
were programmed to unlock between one to three months after the IEO.  FTX did not manage
separate, segregated accounts for investors, but instead pooled all proceeds from the pre-sale and
the IEO of FTT and treated them interchangeably.
79. FTX used the pooled proceeds from FTT sales to fund the development,
marketing, business operations, and growth of FTX, depending on the success of FTX and its
management team in developing, operating, and marketing the trading platform.  If demand for
trading on the FTX platform increased, demand for the FTT token could increase, such that any
price increase in FTT would benefit holders of FTT equally and in direct proportion to their FTT
holdings.  The large allocation of tokens to FTX incentivized the FTX management team to take
steps to attract more users onto the trading platform and, therefore, increase demand for, and
increase the trading price of, the FTT token.
80. As a result of FTX and its management team’s large holdings of FTT, the
interests of the company and its management team were aligned with those of investors in FTT.
81. FTX’s FTT marketing materials—consisting of an FTT “whitepaper” and
information posted on FTX’s website—described FTT as “the token powering the FTX
ecosystem.”  The publicly available information led FTT holders to reasonably expect to share in
FTX’s growth and future earnings, and from appreciation in the value of FTT.
82. The FTT whitepaper specifically highlighted the profit potential of the token.  For
example, the whitepaper included the following statements:  “We launched FTX in April and
already have among the world’s most liquid orderbooks” and “[o]ur goal is to become as

26
profitable as Bitmex and OkEx within a year.”  On the FTX website, FTT purchasers were
offered a 5% bonus of tokens during the first three days of the IEO if they pre-funded their FTX
wallets to purchase FTT, providing a potential immediate profit to investors.  FTX also
represented that FTT would be listed at $1.00 on July 29, 2019, and the “pre-sales” were at
prices ranging from $0.10 to $0.80, which provided purchasers an immediate profit potential
based on the announced listing price.
83. The FTX whitepaper further explained:  “We have carefully designed incentive
schemes to increase network effects and demand for FTT, and to decrease its circulating supply.”
The FTT materials stated that the token provided investors with fee rebates and discounts on
FTX, and the ability to use the token as collateral for futures positions as well as for “margin
trading” that FTX promised to launch “in the future.”  The FTT materials referred to potential
gains from FTX’s future repurchase and burning of FTT (the “buy and burn” program), to be
funded by FTX’s revenues.
6

84. The FTX whitepaper also explained that “[c]ustomers who hold a certain amount
of FTT for a period of time will receive lower FTX futures fees” and that this “will further
increase demand for FTT.”
85. FTT was marketed as an investment that would appreciate in value as it grew and
expanded in other ways.  FTX represented that it “carefully designed incentive schemes to
increase network effects and demand for FTT, and to decrease its circulating supply.”  These
incentives included that FTT would be listed on FTX and thus could be traded, and FTX’s “buy

6
 Generally speaking, “exchange tokens” purport to provide incentives, benefits, and investment returns to holders
and to traders on crypto asset trading platforms.  For example, “exchange tokens” may offer fee discounts with
respect to crypto asset trading platform fees, or offer other benefits, essentially incentivizing the platform’s traders
or users to allocate additional funds to the platform’s ecosystem.  Trading platforms may also offer “exchange
tokens” to their customers in exchange for the customers bringing trading liquidity or other customers or funds to
the platform.

27
and burn” program would purchase FTT, thus boosting demand, and then burn those purchased
tokens in order to decrease the supply of FTT and increase its price.
86. FTX marketed FTT by encouraging purchasers to believe that its platform would
succeed and provide a return based on that success.  The FTT whitepaper emphasized “Why
Invest? -- All-Star Team,” and highlighted the importance of the management team’s experience
and success in developing crypto asset trading systems.  For example, the whitepaper stated that
FTX’s “greatest strength lies in the team behind it” and touted FTX’s “Track Record of Proven
Success” based on the background and experience of its management team.  The FTT materials
made clear that FTX’s core management team’s efforts would drive the growth and ultimate
success of FTX.  The whitepaper also advertised that certain features gave FTX an advantage
over competing platforms, including industry-leading risk management systems and its
liquidation engine model.
87. FTX also marketed FTT as an asset that could be used in an “earn program” or in
“staking programs” (i.e., a program promising interest payments on deposited assets), as
additional ways in which investors could earn returns from FTT.
88. FTX’s whitepaper tied the prospects of FTT’s investors to the growth of the FTX
platform, and noted that FTX would undertake various “Strategies to Acquire Users and Grow
Volume,” including the employment of influential spokespeople.
89. FTX’s whitepaper also stated that “[t]here are many ways FTT will be used as we
add more products and features to FTX.  For instance, when we launch a spot exchange in the
future, FTT will be used for initial exchange offerings.”
90. As a result of the above representations and the economic reality at that time, FTT
investors had a reasonable expectation of profiting from FTX’s efforts to deploy investor funds

28
to create a use for FTT and bring demand and value to their common enterprise.
2.   Alameda and Ellison, at Bankman-Fried’s Direction, Manipulated
the Market Price of FTT.
91. In July 2019, when FTX launched FTT, Alameda received a substantial portion of
the 350 million FTT tokens that were minted, including all of the “company tokens” that were
allocated to FTX.  Alameda did not pay for these tokens
92. Alameda programmed its automated trading tools (or “bots”) to conduct trades
and execute transactions to purchase FTT at specific prices.  On more than one occasion,
Alameda and Ellison, at Bankman-Fried’s direction, actively engaged in the trading of FTT with
the goal of supporting the price of the token.  On these occasions, Alameda adjusted the trading
parameters of its trading bots in order to support the price of FTT.
93. For example, in 2019, there was downward pressure on the price of FTT as the
token was being unlocked for early-stage investors.  Bankman-Fried became concerned about,
among other things, the psychological effect of the price of FTT dropping below a specific
threshold, and instructed Ellison to have Alameda purchase FTT to support the price and avoid
that outcome.  In another instance in 2021, the price of FTT was again facing downward pressure
from external events, this time related to substantial sales of FTT by a third party.  Bankman-
Fried again instructed Ellison to have Alameda purchase FTT on trading platforms to support the
price.  In addition, as described further below in paragraph 106, in November 2022, Ellison
engaged in further deceptive conduct to support the price of FTT.
94. By manipulating the price of FTT, Ellison and Bankman-Fried caused the
valuation of Alameda’s FTT holdings to be even more inflated.  As described above, Alameda’s
FTT holdings were a substantial part of the collateral Alameda used to borrow funds from
external lenders.  By overstating the value of the collateral on Alameda’s balance sheet, Ellison

29
and Bankman-Fried concealed Alameda’s true risk exposure from those lenders, and misled
investors about FTX’s risk exposure—all in furtherance of the fraudulent scheme.
iii. Loans to FTX Executives and Real Estate Purchases
95. The FTX funds transferred to Alameda were used not only for Alameda’s
proprietary trading, but also to fund loans to FTX executives, including Bankman-Fried himself,
and to fund personal real estate purchases.  Between March 2020 and September 2022,
Bankman-Fried executed promissory notes for loans from Alameda totaling more than $1.338
billion, including two instances in which Bankman-Fried was both the borrower in his individual
capacity and the lender in his capacity as CEO of Alameda.  Ellison knew, or was reckless in not
knowing, about these “loans.”
96. Bankman-Fried also used commingled funds from Alameda to make large
political donations and to purchase tens of millions of dollars in Bahamian real estate for himself,
his parents, and other FTX executives.  Specifically, in 2020 and 2021, Wang executed
promissory notes with Alameda totaling approximately $224.7 million.  The funds borrowed
under the promissory notes in Wang’s name were not intended for Wang’s personal use but were
instead used by Bankman-Fried for other purposes, including additional venture investments.
However, Wang did withdraw approximately $200,000 in funds for his own purposes.
97. The loans to Bankman-Fried, Wang, and other individuals were poorly
documented, and at times not documented at all.  Similarly, the record keeping regarding the
purchase and ownership of real estate was poorly organized and documented.  Defendants knew,
or were reckless in not knowing, that neither the fact of the loans and purchases, nor the poor
documentation of significant company liabilities and expenditures, was disclosed to investors.

30
D. Despite the Precarious Financial Position of FTX and Alameda, Bankman-
Fried and Ellison Continued to Use FTX Customer Assets in the Summer of
2022, Including to Rescue Distressed Crypto Firms and to Further Mislead
Investors.
98. In May 2022, the crypto markets plummeted due to a significant loss in value of
certain crypto assets and networks and the collateral effects on the interrelated markets.
Bankman-Fried characterized FTX, and himself, as playing an important role in stabilizing the
industry.  Bankman-Fried entered into a series of transactions with other members of the
industry, providing credit to and taking over other failing firms.  On or about June 21, 2022, after
giving a $250 million line of revolving credit to BlockFi, a global crypto financial services
company, to provide the company with access to capital to ease liquidity concerns, Bankman-
Fried tweeted:  “We take our duty seriously to protect the digital asset ecosystem and its
customers.”
99. At the same time that Bankman-Fried was positioning himself as a hero in the
industry, however, the plummeting value of crypto assets was impacting Alameda, and as a
result impacting FTX.  As discussed above, as a result of the same market conditions impacting
BlockFi’s liquidity, many of Alameda’s lenders demanded repayment of loans they had made to
Alameda.  Ellison, at the direction of Bankman-Fried, drew down billions of dollars from its
“line of credit” from FTX to repay some of Alameda’s loans—money that came from FTX’s
spot market funded by FTX customers.
100. Thus, in the summer of 2022, Defendants and Bankman-Fried knew, or were
reckless in not knowing, that FTX was in a precarious financial condition.  However, Bankman-
Fried and Ellison, with Wang’s knowledge, continued to spend hundreds of millions of dollars to
purchase and support other crypto companies, and allowed Alameda to use FTX customer funds
to repay its debts.  In addition, Bankman-Fried, Wang, and other FTX executives continued to

31
withdraw customer funds in the form of the poorly documented and undisclosed “loans”
described above.  Specifically, on or about July 22, 2022, Bankman-Fried loaned himself $136
million and, on or about September 28, 2022, Wang signed a promissory note to Alameda for
$13.7 million, which was used by Bankman-Fried for a venture investment.  Defendants and
Bankman-Fried knew, or were reckless in not knowing, of the significant financial risk these
“loans” posed to both Alameda and FTX.  Collectively, Defendants’ and Bankman-Fried’s
actions in the summer of 2022 further imperiled FTX’s financial condition.
101. Defendants knew or were reckless in not knowing that Bankman-Fried continued
to present a false and misleading positive account of FTX to investors, despite FTX’s tenuous
financial condition at this time.  In a meeting with FTX’s U.S. investors in September 2022, for
example, an FTX presentation included the claim that:  “Outside of BlockFi, we didn’t increase
our exposure to crypto.”  This statement was false and misleading:  the customer funds that FTX
diverted to Alameda, including customer funds that Ellison used to repay Alameda’s lenders,
were collateralized in part by Alameda’s FTT holdings.  Defendants and Bankman-Fried knew or
were reckless in not knowing that, as a result, FTX’s exposure to crypto, including its own FTT
token, increased substantially as Alameda increased its borrowing, backed by FTT as collateral,
in the second quarter of 2022.
102. In that same meeting with FTX investors, FTX also represented that certain
investments did not involve the assets of FTX or its customers.  Contrary to that representation,
two $100 million investments made by FTX’s affiliated investment vehicle, FTX Ventures Ltd.,
were funded with FTX customer funds that had been diverted to Alameda.

32
E. Even as the Scheme Was Spiraling Out of Control, Bankman-Fried and
Ellison, with Wang’s Knowledge, Continued to Mislead Investors and the
Public About FTX’s True Financial Condition.
103. On or about November 2, 2022, CoinDesk, a crypto news website, published an
article stating that based on its review of an Alameda balance sheet it had obtained, Alameda
held a large position in FTT and other FTX-associated tokens.  At Bankman-Fried’s direction,
Ellison responded on Twitter to reassure investors and the public that Alameda was financially
sound.  Ellison did so on or about November 6, 2022, tweeting that the balance sheet referenced
in the CoinDesk article (and elsewhere by that point) “is for a subset of our corporate entities, we
have > $10 billion of assets that aren’t reflected there.”  Ellison continued:  “...given the
tightening in the crypto credit space this year we’ve returned most of our loans by now.”  The
tweet was designed to provide false reassurance to customers by implying that Alameda had
additional assets that meant its financial condition was stronger than the balance sheet suggested.
At the same time, the tweet omitted the fact that the balance sheet did not accurately reflect the
significant debt that Alameda owed to FTX.  In contrast to the positive message in her tweet, at
that point, Ellison knew, or was reckless in not knowing, that Alameda was insolvent.
104. On or about November 6, 2022, the CEO of Binance, a crypto asset trading
platform, announced that “[d]ue to recent revelations that have came [sic] to light,” Binance
would liquidate its FTT holdings.  Binance held FTT then valued at more than $500 million,
which it had received from FTX as part of Bankman-Fried’s buyout of Binance’s equity in FTX
as an early round investor.
105. Binance’s announcement caused many FTX customers to withdraw their funds
from FTX.  Defendants and Bankman-Fried knew or were reckless in not knowing that given
Alameda’s large FTT holdings, any further drop in the value of FTT threatened the solvency of
FTX, given Alameda’s multi-billion-dollar liabilities.  With the knowledge and consent of the

33
Defendants, Bankman-Fried engaged in a frantic campaign to prevent this outcome by assuring
investors and the public that FTX was financially sound.
106. Specifically, to prevent a collapse in the market price of FTT that Binance’s sales
might cause, Ellison, at Bankman-Fried’s direction, tweeted an offer to buy Binance’s entire
stake, for $22 per token (“@cz_binance if you’re looking to minimize the market impact on your
FTT sales, Alameda will happily buy it all from you today at $22!”).  When Ellison sent this
message she knew, or was reckless in not knowing, that in order for Alameda to be able to
actually purchase Binance’s FTT for $22 per token, Alameda would have to draw down
additional funds from FTX itself, further extending its line of credit, or obtain funds from third-
party lenders without disclosing its own tenuous financial condition.  Despite this, Ellison posted
the tweet in an effort to support and increase the price of FTT, again using Alameda to impact
the price of FTT in furtherance of Defendants’ scheme.
107. Similarly, attempting to maintain public and investor confidence in FTX,
Bankman-Fried tweeted on or about November 7, 2022:  “FTX is fine.  Assets are fine ... FTX
has enough to cover all client holdings.  We don’t invest client assets (even in treasuries).  We
have been processing all withdrawals, and will continue to be ....”  That tweet was false and
misleading, and Bankman-Fried later deleted it.  Defendants and Bankman-Fried knew that FTX,
at Bankman-Fried’s direction, had allowed Alameda to invest “client assets” and that Alameda
had in fact done so, using FTX customer funds to make investments far riskier than “treasuries.”
108. The next day, November 8, 2022, FTX paused all customer withdrawals, and the
price of FTT plummeted by approximately 80%.  Alameda’s collateral on deposit was worth far
less than the amount Alameda had borrowed from FTX.  FTX was left with billions of dollars in
effectively unrecoverable loans.

34
109. Facing a solvency crisis, Bankman-Fried searched for investors who could
provide additional funding.  On or about November 8, 2022, the CEO of Binance tweeted:  “FTX
asked for our help. There is a significant liquidity crunch. To protect users, we signed a non-
binding LOI, intending to fully acquire http://FTX.com and help cover the liquidity crunch. We
will be conducting a full DD [due diligence] in the coming days.”
110. It only took one day, however, for Binance to decide not to acquire FTX.  On or
about November 9, Binance announced:  “As a result of corporate due diligence, as well as the
latest news reports regarding mishandled customer funds and alleged US agency investigations,
we have decided that we will not pursue the potential acquisition of http://FTX.com.”
111. FTX customers withdrew approximately $5 billion from the platform that day.
112. At the same time, Bankman-Fried sought emergency funding from other
investors, including U.S. investors, to cover a shortfall at FTX of approximately $8 billion.  As
part of this effort, Bankman-Fried circulated a balance sheet to potential investors that listed a
negative $8 billion entry labeled as a “hidden, poorly internally labeled ‘fiat@ account.’”  This
entry was a reference to the above-described [email protected] account and reflected FTX customer
funds deposited in Alameda’s bank accounts.
113. During a meeting with Alameda employees on or about November 9, 2022,
Ellison admitted that she, Bankman-Fried, Wang, and Singh were aware that FTX customer
funds had been used by Alameda.
114. On the morning of November 10, 2022, confronting the implosion of FTX and
Alameda, Bankman-Fried tweeted:  “1) I’m sorry.  That’s the biggest thing. I f*cked up, and
should have done better.”
7
  In the same tweet thread, Bankman-Fried announced that Alameda

7
 Expletives have been redacted in part with asterisks.

35
was “winding down trading” and soon would not trade on FTX at all.  Bankman-Fried
maintained that “FTX International currently has a total market value of assets/collateral higher
than client deposits (moves with prices!).”  And he stated, among other things, that he was trying
to “raise liquidity,” claiming “[t]here are a number of players who we are in talks with, LOIs
[letters of intent], term sheets, etc.”
115. The next day, November 11, 2022, Bankman-Fried resigned from FTX.  Shortly
thereafter, FTX and approximately 100 affiliated entities, including FTX US, filed for Chapter
11 bankruptcy protection.  Wang’s employment with FTX and Ellison’s employment with
Alameda were terminated on or about November 18, 2022.
FIRST CLAIM FOR RELIEF
FRAUD IN THE OFFER OR SALE OF SECURITIES
(Violations of Section 17(a)(1) and (3) of the Securities Act)
116. The Commission re-alleges and incorporates by reference the allegations
contained in paragraphs 1 through 115.
117. By reason of the conduct described above, Defendants, in connection with the
offer or sale of securities, by the use of the means or instrumentalities of interstate commerce or
of the mails, directly or indirectly, acting knowingly, recklessly, or, as to (ii), negligently,
(i) employed devices, schemes, or artifices to defraud; and (ii) engaged in acts, practices, or
courses of business which operated or would operate as a fraud or deceit upon any persons,
including purchasers or sellers of the securities.
118. By reason of the conduct described above, Defendants violated Securities Act
Sections 17(a)(1) and (a)(3) [15 U.S.C. § 77q(a)(1) and (a)(3)].

36
SECOND CLAIM FOR RELIEF
FRAUD IN CONNECTION WITH THE PURCHASE OR SALE OF SECURITIES
 (Violations of Section 10(b) of the Exchange Act and Rules 10b-5(a) and (c) Thereunder)
119. The Commission re-alleges and incorporates by reference the allegations
contained in paragraphs 1 through 115.
120. By reason of the conduct described above, Defendants, directly or indirectly, in
connection with the purchase or sale of securities, by the use of the means or instrumentalities of
interstate commerce or of the mails, or of any facility of any national securities exchange,
knowingly or recklessly, (i) employed devices, schemes, or artifices to defraud; and (ii) engaged
in acts, practices, or courses of business which operated or would operate as a fraud or deceit
upon any persons, including purchasers of the securities.
121. By reason of the conduct described above, Defendants violated Exchange Act
Section 10(b) [15 U.S.C. § 78j(b)] and Rules 10b-5(a) and (c) [17 C.F.R. § 240.10b-5(a) and (c)]
thereunder.
PRAYER FOR RELIEF
WHEREFORE, the Commission respectfully requests that this Court enter a Final
Judgment:
A. Permanently restraining and enjoining Defendants, their officers, agents, servants,
employees and attorneys, and those persons in active concert or participation with them who
receive actual notice of the injunction by personal service or otherwise, and each of them, from
violating Section 17(a) of the Securities Act [15 U.S.C. § 77q(a)], and Section 10(b) of the
Exchange Act [15 U.S.C. 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. 240.10b-5];
B. Ordering Defendants pay disgorgement plus prejudgment interest of all ill-gotten
gains obtained by reason of the unlawful conduct alleged in this Complaint, pursuant to

37
Exchange Act Sections 21(d)(5) and 21(d)(7) [15 U.S.C. §§ 78u(d)(5) and 78u(d)(7)];
C. Ordering Defendants to pay civil monetary penalties pursuant to Section 20(d) of
the Securities Act [15 U.S.C. § 77t(d)] and Section 21(d)(3) of the Exchange Act [15 U.S.C.
§ 78u(d)(3)];
D. Ordering Defendants barred from acting as an officer or director pursuant to
Section 20(e) of the Securities Act [15 U.S.C. § 77t(e)] and Section 21(d)(2) of the Exchange
Act [15 U.S.C. § 78u(d)(2)];
E. Prohibiting Defendants from participating, directly or indirectly, including, but
not limited to, through any entity controlled by them, in the issuance, purchase, offer, or sale of
any securities, including crypto asset securities, provided, however, that such injunction shall not
prevent Defendants from purchasing or selling securities, including crypto asset securities, for
their own personal accounts; and
F. Granting such other and further relief as this Court may deem just and proper.

JURY DEMAND
The Commission demands trial by jury.
DATED: New York, New York
December 21, 2022
38
Respectfully submitted,
Jorge G. Tenreiro
David L. Hirsch (not admitted in SONY)
Ladan F. Stewart
Amy Harman Burkart
David J. D'Addio
SECURITIES AND EXCHANGE
COMMISSION
l 00 Pearl Street, Suite 20-100
New York, New York 10004
(212) 336-0153 (Stewart)
Email: [email protected]
Attorneys for the Plaintiff

UNITED STATES DISTRICT COURT 
SOUTHERN DISTRICT OF NEW YORK 

___________________________________________ 
) 

SECURITIES AND     )  
EXCHANGE COMMISSION,   ) 
       )   

Plaintiff,   )  Civil Action No.  22-cv-10794 
)   

v.      ) 
      ) JURY TRIAL DEMANDED  

CAROLINE ELLISON and    ) 
ZIXIAO “GARY” WANG,    ) 
       )   
       ) 
   Defendants.   )   
___________________________________________ ) 
 

COMPLAINT 

Plaintiff Securities and Exchange Commission (the “Commission”), for its complaint 

against Caroline Ellison (“Ellison”) and Zixiao “Gary” Wang (“Wang,” together with Ellison, 

“Defendants”), alleges as follows: 

SUMMARY   

1. From at least May 2019 through November 2022, Defendants, together with 

Samuel Bankman-Fried (“Bankman-Fried”) and others, engaged in a scheme to defraud equity 

investors in FTX Trading Ltd. (“FTX”), the crypto asset trading platform of which Bankman-

Fried and Wang were co-founders, at the same time that they were also defrauding the platform’s 

customers.1  FTX raised more than $1.8 billion from investors, including U.S. investors, who 

bought an equity stake in FTX believing that FTX had appropriate controls and risk management 

measures.  Unbeknownst to those investors (and to FTX’s trading customers), Bankman-Fried 

                                                 
1 Bankman-Fried was charged by the Commission on December 13, 2022, in Securities and Exchange Commission 
v. Samuel Bankman-Fried, 22-cv-10501 (S.D.N.Y.).  The allegations herein are focused on the conduct and 
knowledge of Ellison and Wang, as well as Bankman-Fried.  Other individuals were both aware of and participated 
in some aspects of the fraud scheme described herein.   

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2 

was orchestrating a massive, years-long fraud, diverting billions of dollars of the trading 

platform’s customer funds for his own personal benefit and to help grow his crypto empire.  

Defendants were active participants in the scheme and engaged in conduct that was critical to its 

success.     

2. Throughout this period, Bankman-Fried portrayed himself as a responsible leader 

of the crypto community.  He touted the importance of regulation and accountability.  He told the 

public, including investors, that FTX was both innovative and responsible.  Customers around 

the world believed his lies, and sent billions of dollars to FTX, believing their assets were secure 

on the FTX trading platform.  But Bankman-Fried and Wang improperly diverted customer 

assets to Alameda Research LLC and its subsidiaries (“Alameda”), the crypto asset hedge fund 

that they had founded and co-owned and that Ellison ran.  Wang created and participated in the 

creation of the software code that allowed Alameda to divert FTX customer funds.  Ellison, in 

turn, used the misappropriated FTX customer funds for Alameda’s trading activity.  And 

Bankman-Fried used those customer funds to make undisclosed venture investments, lavish real 

estate purchases, and large political donations.     

3. Working with Bankman-Fried, Defendants hid the scheme from FTX’s equity 

investors, including U.S. investors, from whom FTX sought to raise billions of dollars in 

additional funds.  Bankman-Fried repeatedly cast FTX as an innovative and conservative 

trailblazer in the crypto markets.  He told investors and prospective investors that FTX had top-

notch, sophisticated automated risk measures in place to protect customer assets, that those assets 

were safe and secure, and that Alameda was just another platform customer with no special 

privileges.  Defendants knew or were reckless in not knowing that these statements were false 

and misleading.  In truth, Bankman-Fried and Wang, with Ellison’s knowledge and consent, had 

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3 

exempted Alameda from the risk mitigation measures and had provided Alameda with 

significant special treatment on the FTX platform, including a virtually unlimited “line of credit” 

funded by the platform’s customers.  

4. Beyond its “line of credit” with FTX, Ellison, at Bankman-Fried’s direction, 

caused Alameda to borrow billions of dollars from third party lenders.  Those loans were backed 

in significant part by Alameda’s holdings of FTT—an illiquid crypto asset security that was 

issued by FTX and provided to Alameda at no cost.  Ellison, acting at the direction of Bankman-

Fried, engaged in automated purchases of FTT tokens on various platforms in order to increase 

the price of those tokens and inflate the value of Alameda’s collateral, which allowed Alameda 

to borrow even more money from external lenders at increased risk to the lenders and to FTX’s 

investors and customers, all in furtherance of the scheme.   

5. While Bankman-Fried spent lavishly on office space and condominiums in The 

Bahamas, and sank billions of dollars of customer funds into speculative venture investments, his 

house of cards began to crumble.  When prices of crypto assets plummeted in May 2022, 

Alameda’s lenders demanded repayment on billions of dollars of loans.  Despite the fact that 

Alameda had, by this point, already taken billions of dollars of FTX customer assets, it was 

unable to satisfy its loan obligations.  Bankman-Fried, with Defendants’ knowledge, directed 

FTX to divert billions more in customer assets to Alameda to ensure that Alameda maintained its 

lending relationships, and that money could continue to flow in from lenders and other investors.  

Ellison then used FTX’s customer assets to pay Alameda’s debts.     

6. Even as it was increasingly clear that Alameda and FTX could not make 

customers whole, Bankman-Fried and Defendants continued to misappropriate FTX customer 

funds.  Through the summer of 2022, Bankman-Fried, with Defendants’ knowledge, directed 

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4 

hundreds of millions more in FTX customer funds to Alameda, which he then used for additional 

venture investments and for “loans” to himself and other FTX executives, including Wang.  All 

the while, Bankman-Fried continued to make misleading statements to investors about FTX’s 

financial condition and risk management.  Defendants were aware that Bankman-Fried was 

making these statements, and knew or were reckless in not knowing that they were false and 

misleading.  Even in November 2022, faced with billions of dollars in customer withdrawal 

demands that FTX could not fulfill, Bankman-Fried and Ellison, with Wang’s knowledge, misled 

investors from whom they needed money to plug a multi-billion-dollar hole.  This brazen, multi-

year scheme finally came to an end when FTX, Alameda, and their tangled web of affiliated 

entities filed for bankruptcy on November 11, 2022. 

VIOLATIONS 

7. By engaging in the conduct set forth in this Complaint, Defendants violated 

Section 17(a)(1) and (3) of the Securities Act of 1933 (“Securities Act”) [15 U.S.C. § 77q(a)(1) 

and (3)]; and Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) [15 U.S.C. 

§ 78j(b)] and Rule 10b-5(a) and (c) thereunder [17 C.F.R. § 240.10b-5(a) and (c)]. 

8. Unless Defendants are permanently restrained and enjoined, they will continue to 

engage in the acts, practices, transactions and courses of business set forth in this Complaint and 

in acts, practices, transactions and courses of business of similar type and object. 

NATURE OF THE PROCEEDING AND RELIEF SOUGHT 

9. The Commission brings this action pursuant to the authority conferred upon it by 

Section 20(b) of the Securities Act [15 U.S.C. § 77t(b)] and Section 21(d)(1) of the Exchange 

Act [15 U.S.C. §§ 78u(d)(1)].  

10. The Commission seeks a final judgment:  (i) permanently enjoining Defendants 

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5 

from engaging in the acts, practices, transactions and courses of business alleged herein; 

(ii) ordering Defendants to disgorge their ill-gotten gains and to pay prejudgment interest thereon 

pursuant to Section 21(d)(5) and (7) of the Exchange Act [15 U.S.C. §§ 78u(d)(5) and (7)]; (iii) 

imposing civil money penalties on Defendants pursuant to Section 20(d) of the Securities Act [15 

U.S.C. § 77t(d)] and Section 21(d)(3) of the Exchange Act [15 U.S.C. § 78u(d)(3)]; 

(iv) imposing an officer and director bar on each Defendant pursuant to Section 20(e) of the 

Securities Act [15 U.S.C. § 77t(e)] and Section 21(d)(2) of the Exchange Act [15 U.S.C. 

§ 78u(d)(2)]; (v) prohibiting Defendants from participating in the offer or sale of securities 

including crypto asset securities pursuant to Section 21(d)(5) of the Exchange Act [15 U.S.C. 

§ 78u(d)(5)]; and (vi) ordering such other and further relief the Court may find appropriate 

pursuant to Section 21(d)(5) of the Exchange Act [15 U.S.C. § 78u(d)(5)]. 

JURISDICTION AND VENUE 

11. This Court has jurisdiction over this action pursuant to Sections 20(b), 20(d) and 

22 of the Securities Act [15 U.S.C. §§ 77t(b), 77t(d), and 77v], and Sections 21(d), 21(e), and 27 

of the Exchange Act [15 U.S.C. §§ 78u(d), 78u(e), and 78aa].  In connection with the conduct 

alleged in this Complaint, Defendants, directly or indirectly, made use of the means or 

instruments of transportation or communication in, and the means or instrumentalities of, 

interstate commerce, or of the mails. 

12. Venue is proper in the Southern District of New York pursuant to Section 22(a) of 

the Securities Act [15 U.S.C. § 77v(a)], and Section 27 of the Exchange Act [15 U.S.C. § 78aa].  

Among other acts, false and misleading statements that were part of the fraudulent scheme 

alleged herein were made to investors residing in this District. 

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6 

DEFENDANTS 

13. Caroline Ellison (“Ellison”), age 28, was employed at Alameda beginning in or 

around March 2018.  Ellison was the co-CEO at Alameda from in or around October 2021 to in 

or around August 2022, when she became the sole CEO.2  Ellison’s employment at Alameda was 

terminated on or about November 18, 2022.  Ellison, a United States citizen, resided in Hong 

Kong and The Bahamas during the relevant period. 

14. Zixiao “Gary” Wang (“Wang”), age 29, was a co-founder and the Chief 

Technology Officer of FTX and co-founder and 10% owner of Alameda.  Wang’s employment 

at FTX was terminated on or about November 18, 2022.  During the relevant period, Wang, a 

United States citizen, resided in Hong Kong and The Bahamas. 

RELEVANT PARTIES AND ENTITIES 

15. Samuel Bankman-Fried (“Bankman-Fried”), age 30, was a co-founder and 

majority owner of FTX and, prior to stepping down on November 11, 2022, its CEO.  He was 

also a co-founder and majority owner of Alameda.  He resided in Hong Kong and The Bahamas.   

16. FTX Trading Ltd. (d/b/a FTX.com) (“FTX”) is an Antigua and Barbuda 

limited corporation.  FTX’s principal place of business was in Hong Kong and The Bahamas.  

FTX operated a global crypto asset trading platform and began operations in or around May 

2019.  FTX was available to customers in most countries, but was not permitted to provide 

services to customers in the United States and several other countries.  FTX was founded by 

Bankman-Fried, Wang, and Nishad Singh (“Singh”).  On or about November 11, 2022, FTX and 

certain of its affiliates filed Chapter 11 bankruptcy petitions in the United States Bankruptcy 

Court for the District of Delaware, Case No. 22-11068 (Bankr. Del.).    

                                                 
2 Ellison served as CEO of Alameda Research Ltd., a subsidiary of Alameda Research LLC.  For clarity, as set forth 
in paragraph 17, the complaint refers to Alameda Research LLC and its subsidiaries collectively as “Alameda.” 

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7 

17. Alameda Research LLC is a Delaware company that had operations in the 

United States, Hong Kong, and The Bahamas.  Alameda Research LLC and its subsidiaries, 

including Alameda Research Ltd., are collectively referred to herein as “Alameda.”  Alameda 

was a quantitative trading firm specializing in crypto assets (a “crypto hedge fund”).  Bankman-

Fried and Wang co-founded Alameda in or around October 2017, and, prior to Alameda’s 

bankruptcy filing, had been its sole equity owners, with Bankman-Fried owning 90%, and Wang 

owning 10%, of the company.  Bankman-Fried was CEO of Alameda from its inception until in 

or around October 2021, at which time Ellison and Sam Trabucco (“Trabucco”) became co-

CEOs.  In or around August 2022, Ellison became the sole CEO.  Alameda has filed for Chapter 

11 bankruptcy in the United States Bankruptcy Court for the District of Delaware, Case No. 22-

11068 (Bankr. Del.). 

FACTS 

A. Bankman-Fried, Actively Supported by Defendants, Created a Complex Web 
of Entities, with FTX and Alameda at Its Center. 

18. In or around October 2017, Bankman-Fried and Wang founded Alameda, a 

quantitative trading firm specializing in crypto assets.3  

19. At inception, Alameda was focused on arbitrage trading strategies, but went on to 

employ other strategies including market making, yield farming (pooling of crypto assets in 

exchange for interest or other rewards), and volatility trading.  Alameda also offered over-the-

counter trading services, and made and managed other debt and equity investments. 

20. At first, Bankman-Fried was responsible for trading operations, and Wang 

                                                 
3 Crypto assets are unique digital assets maintained on a cryptographically-secured blockchain.  A blockchain or 
distributed ledger is a peer-to-peer database spread across a network of computers that records all transactions in 
theoretically unchangeable, digitally recorded data packages. The system relies on cryptographic techniques for 
secure recording of transactions.  Crypto tokens may be traded on crypto asset trading platforms in exchange for 
other crypto assets or fiat currency (legal tender issued by a country). 

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handled the engineering and programming functions.  Over time, Alameda hired additional 

employees, including Singh (in or around December 2017), Ellison (in or around March 2018), 

and Trabucco (in or around 2019).  By the end of 2021, Alameda had approximately 30 

employees.  At times, Alameda shared office space and employees with FTX. 

21. Bankman-Fried remained the ultimate decision-maker at Alameda, even after 

Ellison and Trabucco became co-CEOs in or around October 2021.  Bankman-Fried directed 

investment and operational decisions, frequently communicated with Alameda employees, and 

had full access to Alameda’s records and databases.  

22. Ellison was a trader at Alameda during the time Bankman-Fried acted as CEO.  

When Ellison became co-CEO in 2021, and continuing through November 2022, Ellison was 

responsible for Alameda’s day-to-day operations.  Though Ellison made some trading decisions, 

she frequently consulted with Bankman-Fried, particularly about strategic issues and significant 

trades. 

23. In or around 2018, Bankman-Fried began work on building a crypto asset trading 

platform.  Together with Wang and Singh, Bankman-Fried ultimately founded FTX, which 

began operations in or around May 2019.   

24. FTX offered its customers a number of services.  For example:  

a. FTX offered a “spot market,” a trading platform through which customers 

could trade crypto assets with other FTX customers in exchange for fiat 

currency (i.e., currency such as U.S. Dollars) or other crypto assets.   

b. FTX offered “spot margin trading” services, which allowed FTX 

customers to trade using assets they did not have (i.e., to trade “on 

margin”) by posting collateral in their FTX accounts and borrowing crypto 

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9 

assets through the “spot market” on the FTX platform.  FTX also allowed 

customers to lend their crypto assets to other FTX customers who would 

then use those crypto assets to spot trade.   

c. FTX offered an off-platform (over-the-counter or “OTC”) portal that 

enabled customers to connect and request quotes for spot crypto assets and 

to conduct trades. 

25. Bankman-Fried was the ultimate decision-maker at FTX from the platform’s 

inception in or around May 2019 until he resigned as CEO on or about November 11, 2022 (“the 

Relevant Period”).  Wang and Singh were the lead engineers responsible for writing the software 

code for FTX, including the code that allowed for the services described above. 

26. In or around January 2020, Bankman-Fried, Wang, and Singh founded FTX US, a 

crypto asset trading platform designed primarily for customers in the United States.4 

27. Over time, Bankman-Fried expanded his holdings to include a number of 

companies focused on making and managing private (or “venture”) investments.  

28. This interconnected web of companies grew to include over 100 separate entities, 

with Bankman-Fried at the top and Alameda, his crypto hedge fund, at the center. 

29. Throughout the Relevant Period, in multiple public statements, Bankman-Fried 

held himself out as a visionary leader in the crypto industry, and touted his efforts to create a 

regulated and thriving crypto asset market.  He conducted an intensive public relations campaign 

to brand himself and his companies as honest stewards of crypto. 

30. The reality was very different:  From the start, contrary to what FTX investors 

and trading customers were told, Bankman-Fried, actively supported by Defendants, continually 

                                                 
4 FTX US is the d/b/a for a subsidiary of West Realm Shires Inc., a separate legal entity from FTX Trading Ltd. that 
provided different services.  FTX US’s conduct is not the subject of the allegations in this complaint.   

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10 

diverted FTX customer funds to Alameda and then used those funds to continue to grow his 

empire, using billions of dollars to make undisclosed private venture investments, political 

contributions, and real estate purchases. 

31. At the same time, throughout the Relevant Period, Bankman-Fried, with 

Defendants’ knowledge, solicited equity investors by touting FTX’s controls and risk 

management, ultimately raising at least $1.8 billion from investors in exchange for various 

classes of stock in FTX through multiple fundraising rounds, including raising:  (1) 

approximately $8 million from the sale of shares of FTX Series A preferred stock, with 

fundraising completed in or around August 2019; (2) approximately $1 billion from the sale of 

shares of FTX Series B preferred stock, with fundraising completed in or around July 2021; (3) 

approximately $420 million from the sale of shares of FTX Series B-1 stock, with fundraising 

completed in or around October 2021; and (4) approximately $500 million from the sale of 

shares of FTX Series C stock, with fundraising completed in or around January 2022.  Of this 

total, approximately $1.1 billion was invested in FTX by approximately 90 investors based in the 

United States. 

32. For the entire span of the Relevant Period, while raising money from equity 

investors, Bankman-Fried, and those speaking at his direction and on his behalf, with the 

knowledge of Defendants, claimed in widely distributed public forums and directly to investors 

that:  FTX was a safe crypto asset trading platform; FTX had a comparative advantage due to its 

automated risk mitigation procedures; and FTX and its customers were protected from other 

customers’ losses due to FTX’s automated liquidation process.  As discussed further herein, 

these statements and others were misleading in light of Bankman-Fried’s failure to disclose to 

FTX investors the diversion of FTX customer funds to Alameda, which he then used for his own 

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purposes, including loans to himself.  Similarly, Bankman-Fried’s statements concerning the 

separation of FTX and Alameda, made throughout the Relevant Period, were misleading because 

he did not disclose the special treatment afforded to Alameda on FTX, including its virtually 

unlimited “line of credit” at FTX, its ability to carry a negative balance in its FTX customer 

account, and its exemption from FTX’s automated liquidation process—none of which any other 

customer of the platform enjoyed, but which changed the risk profile of FTX.  Defendants were 

aware that Bankman-Fried was making false or misleading statements in order to raise money for 

FTX from equity investors.  At times, they were in close proximity to these discussions, and 

directly or indirectly supported Bankman-Fried in providing false and misleading information to 

investors.   

33. Bankman-Fried also misrepresented the risk profile of investing in FTX 

throughout the Relevant Period by failing to disclose FTX’s exposure to Alameda and, relatedly, 

that the collateral Alameda deposited on FTX consisted largely of illiquid, FTX-affiliated tokens, 

including FTT, the price of which Alameda was actively manipulating.  In addition to these 

material omissions, Bankman-Fried also made material misrepresentations to FTX investors 

about FTX’s risk management and its relationship with Alameda.  As detailed below, Bankman-

Fried made these material misstatements throughout the Relevant Period, and the entire time he 

was raising or attempting to raise funds for FTX—from the time FTX began operations in May 

2019 through its ultimate demise in November 2022.  Again, Defendants were aware that 

Bankman-Fried was making these false or misleading statements and that he was doing so in 

order to raise money from equity investors, and they directly or indirectly supported him in doing 

so.   

B. Defendants Used Alameda to Carry Out the Fraudulent Scheme.  

34. Alameda (and its many subsidiaries) served a number of essential functions in 

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12 

Bankman-Fried’s growing web of companies. For example, Alameda was the primary market 

maker on FTX at the time of FTX’s inception in 2019.  In this capacity, Alameda, at Bankman-

Fried’s direction, was tasked with creating liquidity on FTX to allow the platform to function 

more efficiently.  Bankman-Fried also made venture investments through an Alameda 

subsidiary.  Most crucially, Bankman-Fried used Alameda to house FTX customer assets and to 

deploy those assets, under Bankman-Fried’s direction, to help grow his empire. 

35. From the inception of FTX, Defendants and Bankman-Fried diverted FTX 

customer funds to Alameda, and continued to do so until FTX’s collapse in November 2022. 

36. Defendants and Bankman-Fried diverted FTX customer funds to Alameda in 

essentially two ways:  (1) by directing FTX customers to deposit fiat currency (e.g., U.S. 

Dollars) into bank accounts controlled by Alameda; and (2) by enabling Alameda to draw down 

from a virtually limitless “line of credit” at FTX, which was funded by FTX customer assets.   

37. As a result, there was no meaningful distinction between FTX customer funds and 

Alameda’s own funds.  Bankman-Fried and Wang thus gave Alameda and Ellison carte blanche 

to use FTX customer assets for Alameda’s trading operations and for whatever other purposes 

Bankman-Fried and Ellison saw fit.  In essence, Bankman-Fried and Wang placed billions of 

dollars of FTX customer funds into Alameda.  Bankman-Fried then used Alameda as his 

personal piggy bank to buy luxury condominiums, support political campaigns, and make private 

investments, among other uses.  Ellison used these funds for Alameda’s operations, including 

speculative trading strategies and servicing Alameda’s debt to third-party lenders.  Defendants 

knew that none of this was disclosed to FTX equity investors or to the platform’s trading 

customers. 

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13 

i. FTX Customers Deposited Billions of Dollars into Alameda-Owned 
Bank Accounts, Which Alameda Spent on Its Own Trading Operations 
and to Expand Bankman-Fried’s Empire. 

38. From the start of FTX’s operations in or around May 2019 until at least 2021, 

FTX customers deposited fiat currency (e.g., U.S. Dollars) into bank accounts controlled by 

Alameda.  Billions of dollars of FTX customer funds were so deposited into Alameda-controlled 

bank accounts.  Ellison was aware that Alameda was receiving FTX customer funds.   

39. At least some of these bank accounts were not in Alameda’s name, but rather in 

the name of North Dimension Inc. (“North Dimension”), an Alameda subsidiary.  North 

Dimension’s website does not disclose any connection to Alameda.  Ellison knew that Bankman-

Fried had directed FTX to have customers send funds to North Dimension in an effort to hide the 

fact that the funds were being sent to an account controlled by Alameda.  

40. Alameda did not segregate these customer funds, but instead commingled them 

with its other assets, and used them indiscriminately to fund its trading operations and Bankman-

Fried’s other ventures. 

41. This multi-billion-dollar liability was reflected in an internal account in the FTX 

database that was not tied to Alameda but was instead called “[email protected].”  Characterizing the 

amount of customer funds sent to Alameda as an internal FTX account had the effect of 

concealing Alameda’s liability in FTX’s internal systems.  Defendants knew that FTX customer 

funds were being sent to Alameda-controlled bank accounts and that Alameda’s liability was 

reflected in the “[email protected]” account.   

42. In quarterly balance sheets that Ellison prepared, and that were provided to 

Alameda’s third-party lenders, Alameda tracked this liability as a “loan,” but did not specify that 

the “loan” was from FTX.  Instead, Ellison, at Bankman-Fried’s direction, combined this liability 

with loans Alameda had received from third-party lenders to obscure Alameda’s intertwined 

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14 

financial relationship with FTX.  

43. Alameda was not required to pay interest on the liability reflected in the 

“[email protected]” account.  

44. In 2022, FTX began trying to separate Alameda’s portion of the liability in the 

“[email protected]” account from the portion that was attributable to FTX (i.e., to separate out 

customer deposits sent to Alameda-controlled bank accounts from deposits sent to FTX-

controlled bank accounts).  Alameda’s portion—which amounted to more than $8 billion in FTX 

customer assets that had been deposited into Alameda-controlled bank accounts—was initially 

moved to a different account in the FTX database.  However, because this change caused FTX’s 

internal systems to automatically charge Alameda interest on the more than $8 billion liability, 

Bankman-Fried directed that the Alameda liability be moved to an account that would not be 

charged interest.  This account was associated with an individual that had no apparent connection 

to Alameda.  As a result, this change had the effect of further concealing Alameda’s liability in 

FTX’s internal systems. 

ii. The FTX Platform, By Design, Granted Special Treatment to Alameda, 
Including Features that Allowed Alameda to Divert FTX Customer 
Assets. 

45. In addition to receiving cash deposits directly from FTX customers, Alameda 

benefited from undisclosed features of the FTX platform, which were embedded in software 

code developed by Wang and other FTX engineers, and which allowed Alameda to divert FTX 

customer assets.  For example: 

a. Negative Balance:  Alameda was able to maintain a negative balance in its 

customer account at FTX.  Bankman-Fried directed FTX engineers, including 

Wang, to write software code in or around August 2019, and to update it in or 

around May 2020, ultimately allowing Alameda to maintain a negative balance in 

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15 

its account, untethered from any collateral requirements.  No other customer 

account at FTX was permitted to maintain a negative balance.   

b. Line of Credit:  On multiple occasions, Bankman-Fried directed FTX engineers, 

including Wang, to increase the amount by which Alameda could maintain a 

negative balance in its account.  In effect, this gave an unofficial “line of credit” 

to Alameda, since Alameda was able to draw down on its FTX customer account 

and use those funds—which were actually the funds deposited by other FTX 

customers—for its own trading.  At Bankman-Fried’s direction, Wang and others 

continually raised the limit on Alameda’s “line of credit” to the point where it 

grew to tens of billions of dollars and effectively became limitless.  No other FTX 

customer had a similar “line of credit.” 

c. Liquidation Exemption:  In or around May 2020, Bankman-Fried directed FTX 

engineers, including Wang, to exempt Alameda from the “auto-liquidation” 

feature of FTX’s spot margin trading services.  As a result, Alameda’s collateral 

could fall below the requisite margin levels without triggering the automatic 

liquidation of its account.  Alameda was the only customer exempted from FTX’s 

automatic account liquidation.   

46. Defendants were both aware that these special privileges were afforded to 

Alameda—and only Alameda.  Defendants were also both aware that the existence of these 

special privileges, which were put in place at Bankman-Fried’s direction, were hidden from 

FTX’s investors.  These privileges permitted Alameda to draw on FTX customer assets to a 

virtually unlimited extent for its own uses.  Because its own FTX trading account was able to 

maintain a negative balance of billions of dollars, unbacked by sufficient collateral—as a direct 

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16 

result of software code implemented by Wang and others—Alameda was able to divert billions 

of dollars in FTX customer assets.  Alameda and Ellison did just that in 2022. 

iii. In 2022, Alameda Diverted Billions More in FTX Customer Assets. 

47. Starting in or around 2021, Bankman-Fried directed Ellison to have Alameda 

borrow billions of dollars from third-party crypto asset lending firms in order to fund Bankman-

Fried’s venture investments and for his personal use.  Certain of these loans included provisions 

permitting the lenders to demand re-payment at any time.  

48. In or around May 2022, as prices of crypto assets were dropping precipitously, 

several of these lenders demanded re-payment from Alameda.  Because Alameda did not have 

sufficient assets to cover all of these obligations, Bankman-Fried directed Ellison to draw on 

Alameda’s “line of credit” from FTX, which, based on the software code that Wang had 

previously created, allowed Alameda to borrow virtually limitless funds from FTX.  Billions of 

dollars of FTX customer funds were thus diverted to Alameda and used by Alameda to re-pay its 

third-party loan obligations. 

49. Because Alameda now had billions of dollars more in liability to FTX (on top of 

the billions of dollars reflected in the “[email protected]” account), Bankman-Fried—concerned that 

this enormous liability would alarm Alameda’s lenders—directed Ellison to hide this “line of 

credit” in Alameda’s balance sheet.  Ellison did so and presented this information to lenders, 

knowing that it was materially misleading.   

50. Despite the fact that Alameda now owed FTX billions of dollars with no 

immediate prospects of raising capital to pay off its “line of credit,” Bankman-Fried continued to 

direct Ellison to draw on the Alameda “line of credit” in the summer of 2022.  The customer 

funds diverted to Alameda were used, among other things, to provide hundreds of millions of 

dollars in “loans” to Bankman-Fried and other FTX executives, as well as hundreds of millions 

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17 

more to fund additional venture investments. 

iv. Bankman-Fried, with Defendants’ Knowledge and Consent, Assured 
Investors that FTX Customer Assets Were Secure, and Hid Alameda’s 
Close Relationship with FTX.  

51. Throughout the Relevant Period, Bankman-Fried was directly involved in 

soliciting potential investors in FTX.  Bankman-Fried met, and otherwise communicated, with 

FTX investors, including investors based in the United States.  Along with another FTX 

employee, Bankman-Fried was the point-person for investor relations at FTX.  Defendants knew 

that Bankman-Fried was meeting with and soliciting funds from equity investors.   

52. FTX’s Terms of Service, which were publicly available on FTX’s website and 

accessible to investors, assured FTX customers that their assets were secure, providing:  “you 

control the Digital Assets held in your Account;” “[t]itle to your Digital Assets shall at all times 

remain with you and shall not transfer to FTX;” and “none of the digital assets in your account 

are the property of, or shall or may be loaned to, FTX Trading.”  The Terms of Service further 

provided:  “Once we receive fiat currency we may issue you an equivalent amount of electronic 

money (“E-Money”)…which represents the fiat currency that you have loaded” and “[y]ou may 

redeem all or part of any E-Money held in your Account at any time.”   

53. Similarly, FTX posted on its website a document entitled, “FTX’s Key Principles 

for Ensuring Investor Protections on Digital-Asset Platforms,” in which FTX represented that it 

“segregates customer assets from its own assets across our platforms.”  FTX further represented 

in that document that it maintained “liquid assets for customer withdrawals…[to] ensure a 

customer without losses can redeem its assets from the platform on demand.”   

54. In addition to making this document available to the public on its website, FTX 

specifically provided it to potential investors, including a U.S. investor who had invested $35 

million in FTX’s Series B fundraising round in July 2021.  As described above, these statements 

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18 

to the public, customers, and investors were false—FTX did not segregate its customer assets 

from its own assets, and, as events would later demonstrate, did not maintain liquidity to allow 

customer withdrawals on demand. 

55. FTX investors were provided with FTX’s audited financial statements, and FTX 

represented in its purchase agreements that those financial statements “fairly present in all 

material respects the financial condition and operating results of” FTX.  These audited financial 

statements, which do not include information about Alameda’s undocumented “line of credit” 

from FTX and other information discussed herein, were, at the very least, materially misleading.  

Indeed, FTX’s current CEO has voiced “substantial concern as to the information presented in 

these audited financial statements.”  

56. Throughout the Relevant Period, Bankman-Fried made public statements assuring 

that customer assets were safe at FTX.  For example, he stated in a tweet on or about June 27, 

2022:  “Backstopping customer assets should always be primary.  Everything else is secondary.”  

He likewise tweeted on or about August 9, 2021:  “As always, our users’ funds and safety comes 

first.  We will always allow withdrawals (except in cases of suspected money 

laundering/theft/etc.).” 

57. Bankman-Fried also told investors, and directed other FTX and Alameda 

employees to tell investors, that Alameda received no preferential treatment from FTX.  For 

example, Bankman-Fried told the Wall Street Journal in or around July 2022:  “There are no 

parties that have privileged access.”  Likewise, in a Bloomberg article published in or about 

September 2022, Bankman-Fried claimed that “Alameda is a wholly separate entity” than FTX. 

In the same article, Ellison is quoted as stating about Alameda:  “We’re at arm’s length and don’t 

get any different treatment from other market makers.”  Similarly, in an interview in or about 

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August 2022, Ellison claimed that FTX and Alameda were separate companies, that Alameda 

received no special treatment on the FTX platform, and that there was an ethical wall between 

them preventing sharing of customer information between FTX and Alameda.  Bankman-Fried 

made similar statements directly to investors. 

58. Defendants were aware of the substance of Bankman-Fried’s statements about 

FTX customer assets—including the security of the assets and the manner in which they would 

be handled—and about the relationship between Alameda and FTX.  Given their involvement in 

the fraudulent scheme outlined herein, Defendants knew or were reckless in not knowing that 

these statements to investors were false and misleading and that they were important to FTX’s 

investors.  Defendants further knew or were reckless in not knowing that these statements were 

intended to make FTX more attractive to investors and potential investors. 

C. Defendants Knew that FTX Had Poor Controls and Deeply Inadequate Risk 
Management Procedures, in Stark Contrast to Bankman-Fried’s Claims that 
It Was a Mature, Conservative Company. 

59.  From its inception, FTX had poor controls and fundamentally deficient risk 

management procedures.  Assets and liabilities of all forms were generally treated as 

interchangeable, and there were insufficient distinctions between the assignment of debts and 

credits to Alameda, FTX, and executives, including Bankman-Fried, Wang, and Singh.  This 

reality was a sharp contrast to the image of FTX that Bankman-Fried consistently portrayed to 

the public and to investors—a mature company that managed funds and risk in a conservative, 

rigorous manner.   

60. FTX invested significant resources to develop and promote its brand as a 

trustworthy company.  For example, in materials provided to one investor in or around June 

2022, FTX cultivated and promoted its reputation: 

FTX has an industry-leading brand, endorsed by some of the most 

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trustworthy public figures, including Tom Brady, MLB, Gisele 
Bundchen, Steph Curry, and the Miami Heat, and backed by an 
industry-leading set of investors.  FTX has the cleanest brand in 
crypto.   
 

61. FTX also promoted itself as a company that was willing to work collaboratively 

with regulators and lawmakers.  In the same materials, FTX claimed:  “FTX is also the only 

major digital asset venue to maintain positive, constructive relationships with regulators and 

lawmakers.”   

62. Defendants knew or were reckless in not knowing that the reality was far different 

than what Bankman-Fried presented to FTX’s investors and customers. 

i. The FTX Automated Risk Engine 

63. Bankman-Fried repeatedly touted FTX’s automated risk mitigation protocols—

which he called FTX’s “risk engine”—to the public, and prospective investors, as a safe and 

reliable way for crypto asset trading platforms to manage risk.  FTX engineers, led by Wang, 

developed the software code that created the “risk engine.”  In essence, the software code 

implemented a series of rules that were designed to reduce risk in any individual client’s account 

by automatically triggering certain actions (e.g., to sell collateral in an account when an account 

was overly extended). 

64. Bankman-Fried promoted the concept of “24/7” automated risk monitoring as an 

innovative benefit of crypto asset markets, including at a hearing on or about December 8, 2021, 

to the U.S. House of Representatives Committee on Financial Services, where Bankman-Fried 

concluded his remarks by stating: 

And the last thing I will say is if you look at what precipitated 
some of the 2008 financial crisis, you will see a number of 
bilateral, bespoke, non-reported transactions happening between 
financial counterparties, which then got repackaged and 
releveraged again and again and again, such that no one knew how 
much risk was in that system until it all fell apart.  If you compare 

Case 1:22-cv-10794   Document 1   Filed 12/21/22   Page 20 of 3821 

that to what happened on FTX or other major cryptocurrencies in 
use today, there is complete transparency about the full open 
interest.  There is complete transparency about the positions that 
are held.  There is a robust, consistent risk framework applied.   

 
65. In addition to generally promoting the benefits of automated risk engines, 

Bankman-Fried repeatedly claimed that FTX’s own risk engine was especially sophisticated and 

carefully calibrated.  In a submission to the Commodity Futures Trading Commission, FTX 

touted its automated system, claiming that it calculated a customer’s margin level every 30 

seconds; and that if the collateral on deposit fell below the required margin level, FTX’s 

automated system would sell the customer’s portfolio assets until the collateral on deposit 

exceeded the required margin level.   

66. These statements were materially false and misleading because of a critical 

omission:  Bankman-Fried did not reveal that the automatic risk engine did not apply to the 

accounts of its most important customer—Alameda.  As discussed above, Wang and other FTX 

engineers—as part of Defendants’ and Bankman-Fried’s fraudulent scheme—had created a 

special feature in the software code to exempt Alameda from the rules of the “risk engine.”  This 

was a critical special benefit that Bankman-Fried afforded Alameda:  Alameda’s collateral on 

deposit was allowed to fall below FTX’s required margin level without FTX liquidating any part 

of Alameda’s portfolio.  Ellison was aware of, and took advantage of, this special undisclosed 

benefit.   

67. Defendants knew, or were reckless in not knowing, that Bankman-Fried’s 

statements regarding FTX’s risk engine misled FTX’s investors by representing that its risk 

engine would protect FTX customer funds and would limit FTX’s exposure to any single 

customer, while failing to disclose that Bankman-Fried had directed Wang to ensure that the 

engine not apply to one of its largest customers.   

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22 

68. As Bankman-Fried acknowledged in a network television interview on or about 

December 1, 2022:  “I wasn’t even trying, like, I wasn’t spending any time or effort trying to 

manage risk on FTX.”  Bankman-Fried continued:  “What happened, happened—and, if I had 

been spending an hour a day thinking about risk management on FTX, I don’t think that would 

have happened.”  

ii. The Valuation of Alameda’s Collateral 

69. The collateral that Alameda had on deposit, consisting largely of enormous 

positions in illiquid crypto assets issued by FTX and Bankman-Fried (including the “FTT” token, 

the “exchange token” for FTX, as described below), compounded the undisclosed risk to FTX’s 

investors. 

a. Alameda Overvalued Its Collateral by Ignoring Significant Liquidity 
Issues. 

70. Defendants and Bankman-Fried valued the FTX-affiliated tokens at trading 

prices, but the collateral deposited by Alameda was not worth the value assigned to it.  Alameda 

and FTX collectively owned the majority of these tokens, and only a small portion of the FTX-

affiliated tokens were in circulation.  As such, the tokens were illiquid, and, as Defendants and 

Bankman-Fried knew or were reckless in not knowing, if Alameda or FTX tried to sell 

Alameda’s holdings, market prices for the tokens would fall, thereby driving down the value of 

Alameda’s deposited collateral at FTX.  As a result, even if FTX had liquidated Alameda’s 

portfolio, the sales of those thinly traded tokens would not have generated sufficient funds to 

cover the amount Alameda borrowed from FTX.   

71. Defendants and Bankman-Fried were well aware of the impact of Alameda’s 

positions on FTX’s risk profile.  On or about October 12, 2022, for example, Bankman-Fried, in 

a series of tweets, analyzed the manipulation of a digital asset on an unrelated crypto platform.  

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In explaining what occurred, Bankman-Fried distinguished between an asset’s “current price” 

and its “fair price,” and recognized that “large positions – especially in illiquid tokens – can have 

a lot of impact.”  Bankman-Fried asserted that FTX’s risk engine required customers to “fully 

collateralize a position” when the customer’s position is “large and illiquid enough.”  But 

Bankman-Fried knew, or was reckless in not knowing, that by not mitigating for the impact of 

large and illiquid tokens posted as collateral by Alameda, FTX was engaging in precisely the 

same conduct, and creating the same risk, that he was warning against.  Defendants too knew 

that Alameda was drawing down on a virtually unlimited line of credit from FTX, collateralized 

by what they knew or were reckless in not knowing was a large illiquid position.   

72. The reality of FTX’s exposure to the risk created by the valuation of Alameda’s 

positions stood in stark contrast to Bankman-Fried’s assertions about risk management at FTX in 

his October 2022 Twitter analysis, in which he described FTX’s approach and claimed that 

constructing the rules for FTX’s risk engine in a manner that is “conservative, and handles 

apparent large moves gracefully” is “probably the most important thing we do at FTX.”  

Bankman-Fried further claimed, contrasting FTX to the failed endeavor:  “There are a bunch of 

other risk engine protection and sanity checks, too, which would have caught something like 

this.” 

73. Not only did Bankman-Fried fail to tell investors that he had exempted Alameda 

from FTX’s risk engine, he also falsely told certain investors that FTX had no exposure to FTT 

at all.  In late summer 2021, for example, Bankman-Fried told a potential U.S. investor in FTX’s 

series B fundraising round that FTX did not hold FTT and, consequently, the investor would not 

have any exposure to FTT.  The investor ultimately invested $30 million.  For the reasons 

described above, Defendants and Bankman-Fried knew or were reckless in not knowing that at 

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24 

the time that Bankman-Fried made those representations, they were false and misleading.  

Specifically, Defendants and Bankman-Fried knew or were reckless in not knowing that any 

investment in FTX carried significant exposure to FTT, as the token was, among other things, 

posted as collateral for billions of dollars that FTX had loaned to Alameda to engage in 

speculative investments. 

b. Alameda Manipulated the Market Price of FTT and, as a Result, Further 
Inflated the Value of Its Collateral. 

74. Ellison, at Bankman-Fried’s direction, caused Alameda to manipulate the price of 

FTT by purchasing large quantities of FTT on the open market to prop up its price.  This 

manipulative activity was in furtherance of Defendants’ scheme because it allowed Ellison and 

Alameda to engage in further borrowing, while concealing Alameda’s true risk exposure. 

1. FTT Was Offered and Sold as an Investment Contract and, 
Therefore, as a Security. 

75. On or about July 29, 2019, FTX launched a crypto asset known as “FTT.”5  FTX 

launched FTT as an “exchange token” for the FTX platform (i.e., the crypto asset or token 

associated with a crypto trading platform).   

76. Before launching the FTX platform in or around May 2019, FTX had minted 350 

million FTT tokens in or around April 2019.  Of the 350 million tokens minted, 175 million were 

allocated to FTX as “company tokens,” and 175 million were designated as non-company 

tokens.  The company tokens were set to “unlock” (or become available for trading) over a three-

year period after a so-called initial exchange offering (“IEO”) of the token.    

77. From the time of its offering, FTT was offered and sold as an investment contract 

and therefore a security.  

                                                 
5 FTT was available for trading on FTX, but not on FTX US. 

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25 

78. Of the 175 million non-company tokens, FTX offered and sold approximately 73 

million FTT in so-called “pre-sales” to investors, at prices ranging from $0.10 to $0.80.  FTX 

raised approximately $10 million from these sales of FTT prior to the IEO.  The pre-sale tokens 

were programmed to unlock between one to three months after the IEO.  FTX did not manage 

separate, segregated accounts for investors, but instead pooled all proceeds from the pre-sale and 

the IEO of FTT and treated them interchangeably.  

79. FTX used the pooled proceeds from FTT sales to fund the development, 

marketing, business operations, and growth of FTX, depending on the success of FTX and its 

management team in developing, operating, and marketing the trading platform.  If demand for 

trading on the FTX platform increased, demand for the FTT token could increase, such that any 

price increase in FTT would benefit holders of FTT equally and in direct proportion to their FTT 

holdings.  The large allocation of tokens to FTX incentivized the FTX management team to take 

steps to attract more users onto the trading platform and, therefore, increase demand for, and 

increase the trading price of, the FTT token.   

80. As a result of FTX and its management team’s large holdings of FTT, the 

interests of the company and its management team were aligned with those of investors in FTT.   

81. FTX’s FTT marketing materials—consisting of an FTT “whitepaper” and 

information posted on FTX’s website—described FTT as “the token powering the FTX 

ecosystem.”  The publicly available information led FTT holders to reasonably expect to share in 

FTX’s growth and future earnings, and from appreciation in the value of FTT.   

82. The FTT whitepaper specifically highlighted the profit potential of the token.  For 

example, the whitepaper included the following statements:  “We launched FTX in April and 

already have among the world’s most liquid orderbooks” and “[o]ur goal is to become as 

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26 

profitable as Bitmex and OkEx within a year.”  On the FTX website, FTT purchasers were 

offered a 5% bonus of tokens during the first three days of the IEO if they pre-funded their FTX 

wallets to purchase FTT, providing a potential immediate profit to investors.  FTX also 

represented that FTT would be listed at $1.00 on July 29, 2019, and the “pre-sales” were at 

prices ranging from $0.10 to $0.80, which provided purchasers an immediate profit potential 

based on the announced listing price. 

83. The FTX whitepaper further explained:  “We have carefully designed incentive 

schemes to increase network effects and demand for FTT, and to decrease its circulating supply.”  

The FTT materials stated that the token provided investors with fee rebates and discounts on 

FTX, and the ability to use the token as collateral for futures positions as well as for “margin 

trading” that FTX promised to launch “in the future.”  The FTT materials referred to potential 

gains from FTX’s future repurchase and burning of FTT (the “buy and burn” program), to be 

funded by FTX’s revenues.6   

84. The FTX whitepaper also explained that “[c]ustomers who hold a certain amount 

of FTT for a period of time will receive lower FTX futures fees” and that this “will further 

increase demand for FTT.” 

85. FTT was marketed as an investment that would appreciate in value as it grew and 

expanded in other ways.  FTX represented that it “carefully designed incentive schemes to 

increase network effects and demand for FTT, and to decrease its circulating supply.”  These 

incentives included that FTT would be listed on FTX and thus could be traded, and FTX’s “buy 

                                                 
6 Generally speaking, “exchange tokens” purport to provide incentives, benefits, and investment returns to holders 
and to traders on crypto asset trading platforms.  For example, “exchange tokens” may offer fee discounts with 
respect to crypto asset trading platform fees, or offer other benefits, essentially incentivizing the platform’s traders 
or users to allocate additional funds to the platform’s ecosystem.  Trading platforms may also offer “exchange 
tokens” to their customers in exchange for the customers bringing trading liquidity or other customers or funds to 
the platform.  

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27 

and burn” program would purchase FTT, thus boosting demand, and then burn those purchased 

tokens in order to decrease the supply of FTT and increase its price.   

86. FTX marketed FTT by encouraging purchasers to believe that its platform would 

succeed and provide a return based on that success.  The FTT whitepaper emphasized “Why 

Invest? -- All-Star Team,” and highlighted the importance of the management team’s experience 

and success in developing crypto asset trading systems.  For example, the whitepaper stated that 

FTX’s “greatest strength lies in the team behind it” and touted FTX’s “Track Record of Proven 

Success” based on the background and experience of its management team.  The FTT materials 

made clear that FTX’s core management team’s efforts would drive the growth and ultimate 

success of FTX.  The whitepaper also advertised that certain features gave FTX an advantage 

over competing platforms, including industry-leading risk management systems and its 

liquidation engine model.  

87. FTX also marketed FTT as an asset that could be used in an “earn program” or in 

“staking programs” (i.e., a program promising interest payments on deposited assets), as 

additional ways in which investors could earn returns from FTT. 

88. FTX’s whitepaper tied the prospects of FTT’s investors to the growth of the FTX 

platform, and noted that FTX would undertake various “Strategies to Acquire Users and Grow 

Volume,” including the employment of influential spokespeople.   

89. FTX’s whitepaper also stated that “[t]here are many ways FTT will be used as we 

add more products and features to FTX.  For instance, when we launch a spot exchange in the 

future, FTT will be used for initial exchange offerings.” 

90. As a result of the above representations and the economic reality at that time, FTT 

investors had a reasonable expectation of profiting from FTX’s efforts to deploy investor funds 

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to create a use for FTT and bring demand and value to their common enterprise.   

2. Alameda and Ellison, at Bankman-Fried’s Direction, Manipulated 
the Market Price of FTT. 

91. In July 2019, when FTX launched FTT, Alameda received a substantial portion of 

the 350 million FTT tokens that were minted, including all of the “company tokens” that were 

allocated to FTX.  Alameda did not pay for these tokens 

92. Alameda programmed its automated trading tools (or “bots”) to conduct trades 

and execute transactions to purchase FTT at specific prices.  On more than one occasion, 

Alameda and Ellison, at Bankman-Fried’s direction, actively engaged in the trading of FTT with 

the goal of supporting the price of the token.  On these occasions, Alameda adjusted the trading 

parameters of its trading bots in order to support the price of FTT.   

93. For example, in 2019, there was downward pressure on the price of FTT as the 

token was being unlocked for early-stage investors.  Bankman-Fried became concerned about, 

among other things, the psychological effect of the price of FTT dropping below a specific 

threshold, and instructed Ellison to have Alameda purchase FTT to support the price and avoid 

that outcome.  In another instance in 2021, the price of FTT was again facing downward pressure 

from external events, this time related to substantial sales of FTT by a third party.  Bankman-

Fried again instructed Ellison to have Alameda purchase FTT on trading platforms to support the 

price.  In addition, as described further below in paragraph 106, in November 2022, Ellison 

engaged in further deceptive conduct to support the price of FTT.   

94. By manipulating the price of FTT, Ellison and Bankman-Fried caused the 

valuation of Alameda’s FTT holdings to be even more inflated.  As described above, Alameda’s 

FTT holdings were a substantial part of the collateral Alameda used to borrow funds from 

external lenders.  By overstating the value of the collateral on Alameda’s balance sheet, Ellison 

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and Bankman-Fried concealed Alameda’s true risk exposure from those lenders, and misled 

investors about FTX’s risk exposure—all in furtherance of the fraudulent scheme. 

iii. Loans to FTX Executives and Real Estate Purchases 

95. The FTX funds transferred to Alameda were used not only for Alameda’s 

proprietary trading, but also to fund loans to FTX executives, including Bankman-Fried himself, 

and to fund personal real estate purchases.  Between March 2020 and September 2022, 

Bankman-Fried executed promissory notes for loans from Alameda totaling more than $1.338 

billion, including two instances in which Bankman-Fried was both the borrower in his individual 

capacity and the lender in his capacity as CEO of Alameda.  Ellison knew, or was reckless in not 

knowing, about these “loans.” 

96. Bankman-Fried also used commingled funds from Alameda to make large 

political donations and to purchase tens of millions of dollars in Bahamian real estate for himself, 

his parents, and other FTX executives.  Specifically, in 2020 and 2021, Wang executed 

promissory notes with Alameda totaling approximately $224.7 million.  The funds borrowed 

under the promissory notes in Wang’s name were not intended for Wang’s personal use but were 

instead used by Bankman-Fried for other purposes, including additional venture investments.  

However, Wang did withdraw approximately $200,000 in funds for his own purposes.   

97. The loans to Bankman-Fried, Wang, and other individuals were poorly 

documented, and at times not documented at all.  Similarly, the record keeping regarding the 

purchase and ownership of real estate was poorly organized and documented.  Defendants knew, 

or were reckless in not knowing, that neither the fact of the loans and purchases, nor the poor 

documentation of significant company liabilities and expenditures, was disclosed to investors.   

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D. Despite the Precarious Financial Position of FTX and Alameda, Bankman-
Fried and Ellison Continued to Use FTX Customer Assets in the Summer of 
2022, Including to Rescue Distressed Crypto Firms and to Further Mislead 
Investors.  

98. In May 2022, the crypto markets plummeted due to a significant loss in value of 

certain crypto assets and networks and the collateral effects on the interrelated markets.  

Bankman-Fried characterized FTX, and himself, as playing an important role in stabilizing the 

industry.  Bankman-Fried entered into a series of transactions with other members of the 

industry, providing credit to and taking over other failing firms.  On or about June 21, 2022, after 

giving a $250 million line of revolving credit to BlockFi, a global crypto financial services 

company, to provide the company with access to capital to ease liquidity concerns, Bankman-

Fried tweeted:  “We take our duty seriously to protect the digital asset ecosystem and its 

customers.”  

99. At the same time that Bankman-Fried was positioning himself as a hero in the 

industry, however, the plummeting value of crypto assets was impacting Alameda, and as a 

result impacting FTX.  As discussed above, as a result of the same market conditions impacting 

BlockFi’s liquidity, many of Alameda’s lenders demanded repayment of loans they had made to 

Alameda.  Ellison, at the direction of Bankman-Fried, drew down billions of dollars from its 

“line of credit” from FTX to repay some of Alameda’s loans—money that came from FTX’s 

spot market funded by FTX customers.     

100. Thus, in the summer of 2022, Defendants and Bankman-Fried knew, or were 

reckless in not knowing, that FTX was in a precarious financial condition.  However, Bankman-

Fried and Ellison, with Wang’s knowledge, continued to spend hundreds of millions of dollars to 

purchase and support other crypto companies, and allowed Alameda to use FTX customer funds 

to repay its debts.  In addition, Bankman-Fried, Wang, and other FTX executives continued to 

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withdraw customer funds in the form of the poorly documented and undisclosed “loans” 

described above.  Specifically, on or about July 22, 2022, Bankman-Fried loaned himself $136 

million and, on or about September 28, 2022, Wang signed a promissory note to Alameda for 

$13.7 million, which was used by Bankman-Fried for a venture investment.  Defendants and 

Bankman-Fried knew, or were reckless in not knowing, of the significant financial risk these 

“loans” posed to both Alameda and FTX.  Collectively, Defendants’ and Bankman-Fried’s 

actions in the summer of 2022 further imperiled FTX’s financial condition.   

101. Defendants knew or were reckless in not knowing that Bankman-Fried continued 

to present a false and misleading positive account of FTX to investors, despite FTX’s tenuous 

financial condition at this time.  In a meeting with FTX’s U.S. investors in September 2022, for 

example, an FTX presentation included the claim that:  “Outside of BlockFi, we didn’t increase 

our exposure to crypto.”  This statement was false and misleading:  the customer funds that FTX 

diverted to Alameda, including customer funds that Ellison used to repay Alameda’s lenders, 

were collateralized in part by Alameda’s FTT holdings.  Defendants and Bankman-Fried knew or 

were reckless in not knowing that, as a result, FTX’s exposure to crypto, including its own FTT 

token, increased substantially as Alameda increased its borrowing, backed by FTT as collateral, 

in the second quarter of 2022.   

102. In that same meeting with FTX investors, FTX also represented that certain 

investments did not involve the assets of FTX or its customers.  Contrary to that representation, 

two $100 million investments made by FTX’s affiliated investment vehicle, FTX Ventures Ltd., 

were funded with FTX customer funds that had been diverted to Alameda.   

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E. Even as the Scheme Was Spiraling Out of Control, Bankman-Fried and 
Ellison, with Wang’s Knowledge, Continued to Mislead Investors and the 
Public About FTX’s True Financial Condition. 

103. On or about November 2, 2022, CoinDesk, a crypto news website, published an 

article stating that based on its review of an Alameda balance sheet it had obtained, Alameda 

held a large position in FTT and other FTX-associated tokens.  At Bankman-Fried’s direction, 

Ellison responded on Twitter to reassure investors and the public that Alameda was financially 

sound.  Ellison did so on or about November 6, 2022, tweeting that the balance sheet referenced 

in the CoinDesk article (and elsewhere by that point) “is for a subset of our corporate entities, we 

have > $10 billion of assets that aren’t reflected there.”  Ellison continued:  “…given the 

tightening in the crypto credit space this year we’ve returned most of our loans by now.”  The 

tweet was designed to provide false reassurance to customers by implying that Alameda had 

additional assets that meant its financial condition was stronger than the balance sheet suggested.  

At the same time, the tweet omitted the fact that the balance sheet did not accurately reflect the 

significant debt that Alameda owed to FTX.  In contrast to the positive message in her tweet, at 

that point, Ellison knew, or was reckless in not knowing, that Alameda was insolvent.   

104. On or about November 6, 2022, the CEO of Binance, a crypto asset trading 

platform, announced that “[d]ue to recent revelations that have came [sic] to light,” Binance 

would liquidate its FTT holdings.  Binance held FTT then valued at more than $500 million, 

which it had received from FTX as part of Bankman-Fried’s buyout of Binance’s equity in FTX 

as an early round investor.   

105. Binance’s announcement caused many FTX customers to withdraw their funds 

from FTX.  Defendants and Bankman-Fried knew or were reckless in not knowing that given 

Alameda’s large FTT holdings, any further drop in the value of FTT threatened the solvency of 

FTX, given Alameda’s multi-billion-dollar liabilities.  With the knowledge and consent of the 

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Defendants, Bankman-Fried engaged in a frantic campaign to prevent this outcome by assuring 

investors and the public that FTX was financially sound.    

106. Specifically, to prevent a collapse in the market price of FTT that Binance’s sales 

might cause, Ellison, at Bankman-Fried’s direction, tweeted an offer to buy Binance’s entire 

stake, for $22 per token (“@cz_binance if you’re looking to minimize the market impact on your 

FTT sales, Alameda will happily buy it all from you today at $22!”).  When Ellison sent this 

message she knew, or was reckless in not knowing, that in order for Alameda to be able to 

actually purchase Binance’s FTT for $22 per token, Alameda would have to draw down 

additional funds from FTX itself, further extending its line of credit, or obtain funds from third-

party lenders without disclosing its own tenuous financial condition.  Despite this, Ellison posted 

the tweet in an effort to support and increase the price of FTT, again using Alameda to impact 

the price of FTT in furtherance of Defendants’ scheme.    

107. Similarly, attempting to maintain public and investor confidence in FTX, 

Bankman-Fried tweeted on or about November 7, 2022:  “FTX is fine.  Assets are fine … FTX 

has enough to cover all client holdings.  We don’t invest client assets (even in treasuries).  We 

have been processing all withdrawals, and will continue to be ….”  That tweet was false and 

misleading, and Bankman-Fried later deleted it.  Defendants and Bankman-Fried knew that FTX, 

at Bankman-Fried’s direction, had allowed Alameda to invest “client assets” and that Alameda 

had in fact done so, using FTX customer funds to make investments far riskier than “treasuries.”    

108. The next day, November 8, 2022, FTX paused all customer withdrawals, and the 

price of FTT plummeted by approximately 80%.  Alameda’s collateral on deposit was worth far 

less than the amount Alameda had borrowed from FTX.  FTX was left with billions of dollars in 

effectively unrecoverable loans.     

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34 

109. Facing a solvency crisis, Bankman-Fried searched for investors who could 

provide additional funding.  On or about November 8, 2022, the CEO of Binance tweeted:  “FTX 

asked for our help. There is a significant liquidity crunch. To protect users, we signed a non-

binding LOI, intending to fully acquire http://FTX.com and help cover the liquidity crunch. We 

will be conducting a full DD [due diligence] in the coming days.”   

110. It only took one day, however, for Binance to decide not to acquire FTX.  On or 

about November 9, Binance announced:  “As a result of corporate due diligence, as well as the 

latest news reports regarding mishandled customer funds and alleged US agency investigations, 

we have decided that we will not pursue the potential acquisition of http://FTX.com.” 

111. FTX customers withdrew approximately $5 billion from the platform that day.   

112. At the same time, Bankman-Fried sought emergency funding from other 

investors, including U.S. investors, to cover a shortfall at FTX of approximately $8 billion.  As 

part of this effort, Bankman-Fried circulated a balance sheet to potential investors that listed a 

negative $8 billion entry labeled as a “hidden, poorly internally labeled ‘fiat@ account.’”  This 

entry was a reference to the above-described [email protected] account and reflected FTX customer 

funds deposited in Alameda’s bank accounts.   

113. During a meeting with Alameda employees on or about November 9, 2022, 

Ellison admitted that she, Bankman-Fried, Wang, and Singh were aware that FTX customer 

funds had been used by Alameda.   

114. On the morning of November 10, 2022, confronting the implosion of FTX and 

Alameda, Bankman-Fried tweeted:  “1) I’m sorry.  That’s the biggest thing. I f*cked up, and 

should have done better.”7  In the same tweet thread, Bankman-Fried announced that Alameda 

                                                 
7 Expletives have been redacted in part with asterisks.   

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35 

was “winding down trading” and soon would not trade on FTX at all.  Bankman-Fried 

maintained that “FTX International currently has a total market value of assets/collateral higher 

than client deposits (moves with prices!).”  And he stated, among other things, that he was trying 

to “raise liquidity,” claiming “[t]here are a number of players who we are in talks with, LOIs 

[letters of intent], term sheets, etc.”   

115. The next day, November 11, 2022, Bankman-Fried resigned from FTX.  Shortly 

thereafter, FTX and approximately 100 affiliated entities, including FTX US, filed for Chapter 

11 bankruptcy protection.  Wang’s employment with FTX and Ellison’s employment with 

Alameda were terminated on or about November 18, 2022. 

FIRST CLAIM FOR RELIEF 

FRAUD IN THE OFFER OR SALE OF SECURITIES  

(Violations of Section 17(a)(1) and (3) of the Securities Act) 

116. The Commission re-alleges and incorporates by reference the allegations 

contained in paragraphs 1 through 115. 

117. By reason of the conduct described above, Defendants, in connection with the 

offer or sale of securities, by the use of the means or instrumentalities of interstate commerce or 

of the mails, directly or indirectly, acting knowingly, recklessly, or, as to (ii), negligently, 

(i) employed devices, schemes, or artifices to defraud; and (ii) engaged in acts, practices, or 

courses of business which operated or would operate as a fraud or deceit upon any persons, 

including purchasers or sellers of the securities.   

118. By reason of the conduct described above, Defendants violated Securities Act 

Sections 17(a)(1) and (a)(3) [15 U.S.C. § 77q(a)(1) and (a)(3)]. 

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36 

SECOND CLAIM FOR RELIEF 

FRAUD IN CONNECTION WITH THE PURCHASE OR SALE OF SECURITIES  

 (Violations of Section 10(b) of the Exchange Act and Rules 10b-5(a) and (c) Thereunder) 

119. The Commission re-alleges and incorporates by reference the allegations 

contained in paragraphs 1 through 115. 

120. By reason of the conduct described above, Defendants, directly or indirectly, in 

connection with the purchase or sale of securities, by the use of the means or instrumentalities of 

interstate commerce or of the mails, or of any facility of any national securities exchange, 

knowingly or recklessly, (i) employed devices, schemes, or artifices to defraud; and (ii) engaged 

in acts, practices, or courses of business which operated or would operate as a fraud or deceit 

upon any persons, including purchasers of the securities. 

121. By reason of the conduct described above, Defendants violated Exchange Act 

Section 10(b) [15 U.S.C. § 78j(b)] and Rules 10b-5(a) and (c) [17 C.F.R. § 240.10b-5(a) and (c)] 

thereunder. 

PRAYER FOR RELIEF 

WHEREFORE, the Commission respectfully requests that this Court enter a Final 

Judgment: 

A. Permanently restraining and enjoining Defendants, their officers, agents, servants, 

employees and attorneys, and those persons in active concert or participation with them who 

receive actual notice of the injunction by personal service or otherwise, and each of them, from 

violating Section 17(a) of the Securities Act [15 U.S.C. § 77q(a)], and Section 10(b) of the 

Exchange Act [15 U.S.C. 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. 240.10b-5]; 

B. Ordering Defendants pay disgorgement plus prejudgment interest of all ill-gotten 

gains obtained by reason of the unlawful conduct alleged in this Complaint, pursuant to 

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37 

Exchange Act Sections 21(d)(5) and 21(d)(7) [15 U.S.C. §§ 78u(d)(5) and 78u(d)(7)]; 

C. Ordering Defendants to pay civil monetary penalties pursuant to Section 20(d) of 

the Securities Act [15 U.S.C. § 77t(d)] and Section 21(d)(3) of the Exchange Act [15 U.S.C. 

§ 78u(d)(3)];  

D. Ordering Defendants barred from acting as an officer or director pursuant to 

Section 20(e) of the Securities Act [15 U.S.C. § 77t(e)] and Section 21(d)(2) of the Exchange 

Act [15 U.S.C. § 78u(d)(2)];  

E. Prohibiting Defendants from participating, directly or indirectly, including, but 

not limited to, through any entity controlled by them, in the issuance, purchase, offer, or sale of 

any securities, including crypto asset securities, provided, however, that such injunction shall not 

prevent Defendants from purchasing or selling securities, including crypto asset securities, for 

their own personal accounts; and 

F. Granting such other and further relief as this Court may deem just and proper. 

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JURY DEMAND 

The Commission demands trial by jury. 

DATED: New York, New York 

December 21, 2022 

38 

Respectfully submitted, 

Jorge G. Tenreiro 

David L. Hirsch (not admitted in SONY) 
Ladan F. Stewart 
Amy Harman Burkart 
David J. D'Addio 
SECURITIES AND EXCHANGE 

COMMISSION 

l 00 Pearl Street, Suite 20-100
New York, New York 10004
(212) 336-0153 (Stewart)

Email: [email protected]

Attorneys for the Plaintiff 

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