The Commodity Futures Trading Commission (CFTC) has imposed five-year trading bans on former Alameda Research CEO Caroline Ellison and former FTX co-founder Gary Wang, resolving the agency’s remaining enforcement claims against the two executives.
The U.S. District Court for the Southern District of New York entered supplemental consent orders, filed on Tuesday, for Ellison and Wang, requiring both to continue cooperating with the CFTC. Ellison is also barred from registering with the agency for 10 years, while Wang faces an eight-year registration ban. The restrictions run from the dates of the initial consent orders entered in December 2022.
The CFTC said it is not seeking restitution, disgorgement or civil monetary penalties at this time, citing the executives’ cooperation with its investigation and related proceedings.
CFTC resolves remaining FTX claims
The supplemental orders build on liability findings entered against Ellison and Wang on Dec. 23, 2022.
The court previously found Ellison liable on two fraud counts in the CFTC’s amended complaint and Wang liable on one fraud count. Those initial orders also permanently barred both from violating the Commodity Exchange Act’s antifraud provisions and related CFTC regulations. The new orders address the remaining remedies in the CFTC’s case.
Under Wang’s order, for example, the five-year trading prohibition covers trading on or subject to the rules of a registered entity, transactions involving commodity interests and digital asset commodities, and controlling or directing such trading for another person or entity.
The eight-year restriction separately bars Wang from applying for CFTC registration or claiming an exemption from registration, subject to a limited regulatory exception.
Cooperation weighs against additional monetary penalties
The CFTC said its decision not to seek monetary sanctions at this stage reflects the cooperation provided by Ellison and Wang in the agency’s investigation and related proceedings.
The orders require both to continue cooperating with the Commission. If the CFTC later determines that either defendant knowingly provided materially false or misleading information or breached the terms of a cooperation agreement, it can ask the court to reopen the matter and seek additional relief, including restitution, disgorgement or civil penalties.
“Today’s resolution further underscores the high value this Division places on robust cooperation,” CFTC Enforcement Director David I. Miller said in the agency’s announcement.
Criminal cases and $11.02 billion forfeiture
The CFTC also cited the parallel federal criminal proceedings and an $11.02 billion forfeiture order as factors in determining the remaining relief. Ellison and Wang each pleaded guilty to criminal charges arising from the collapse of FTX and Alameda, including conspiracy to commit commodities fraud, according to the CFTC orders.
Wang’s supplemental order notes that he was sentenced to time served and three years of supervised release in the criminal case and was jointly and severally liable for the $11.02 billion forfeiture judgment.
Senate rejects clemency for Bankman-Fried
The CFTC’s latest orders come after the Senate unanimously adopted S. Res. 772 on July 15, expressing its opposition to any presidential pardon, commutation, or other federal clemency for FTX founder Sam Bankman-Fried.
The resolution was introduced by Sen. Cynthia Lummis (R-Wyo.) and Sen. Ruben Gallego (D-Ariz.), the top Republican and Democrat on the Senate Banking Committee’s digital-assets subcommittee. Both lawmakers have been involved in efforts to advance U.S. crypto market-structure legislation.
The nonbinding resolution cited the harm caused by Bankman-Fried’s conduct and his alleged lack of remorse. Its unanimous adoption means no senator objected to the measure.
Bans mark final phase of CFTC actions against Ellison and Wang
The CFTC’s enforcement action dates to December 2022, shortly after FTX filed for bankruptcy. The agency’s amended complaint named Sam Bankman-Fried, FTX Trading, Alameda Research, Ellison and Wang.
The initial orders against Ellison and Wang established liability while leaving monetary relief and other remedies for later determination. The supplemental orders now resolve those remaining issues for the two defendants. The CFTC said the initial and supplemental consent orders resolve its enforcement actions against Ellison and Wang.
What the orders mean
The latest court orders do not impose new monetary penalties on Ellison or Wang. Instead, they formalize restrictions on their participation in commodity markets and CFTC-regulated activities while preserving their obligation to cooperate with the agency.
For Ellison, the restrictions include a five-year trading ban and a 10-year registration ban. For Wang, they include a five-year trading ban and an eight-year registration ban. The case also highlights the CFTC’s use of cooperation as a factor in resolving enforcement actions, particularly where defendants have already faced substantial consequences in parallel criminal proceedings.
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