Bankman-Fried execs likely to be freed on bail after FTX fraud pleas
Damian Williams, US attorney for the Southern District of New York, speaks during a new conference at the US Attorney’s Office-Southern District of New York (SDNY) in New York, US, on Tuesday, Dec. 13, 2022.
Jeenah Moon | Bloomberg | Getty Images
Federal prosecutors endorsed plans to allow two former Sam Bankman-Fried lieutenants, Gary Wang and Caroline Ellison, to post bail after both pleaded guilty to supporting a multibillion-dollar fraud allegedly perpetrated by former FTX CEO Bankman-Fried, court documents show.
Gary Wang was the chief technology officer of FTX. Caroline Ellison was the co-CEO of Alameda Research, Bankman-Fried’s cryptocurrency trading firm.
Wang and Ellison would be required to post $250,000 in bail each, surrender their passports and restrict their travel to the continental United States.
In return, the pair conceded their role in supporting an $8 billion fraud that left millions of customers without their investments and destabilized the crypto industry.
Prosecutors won’t object to the bail conditions, but it’s unclear whether a judge will approve them.
Attorneys for Ellison and Wang did not immediately respond to requests for comment.
In an earlier statement, Wang’s attorney Ilan Graff, a partner at Fried, Frank, Harris, Shriver & Jacobson, said “Gary has accepted responsibility for his actions and takes seriously his obligations as a cooperating witness.”
In addition to admitting their complicity in the collapse of FTX, Wang and Ellison signed consent orders with the Commodity Futures Trading Commission, a civil concession that Bankman-Fried has yet to make. Wang and Ellison also both settled separately with the Securities and Exchange Commission.
Wang, 29, and Ellison, 28, both pleaded guilty to fraud charges stemming from their leadership positions at FTX and Alameda, respectively. They signed their deals in the Manhattan U.S. Attorney’s Office on Monday.
Whether Bankman-Fried, 30, has made a plea deal has not yet been disclosed. In a prerecorded statement Wednesday night, U.S. Attorney Damian Williams said the indicted former FTX CEO had been taken into FBI custody after a chaotic Bahamas extradition process.
Bankman-Fried will appear before a judge Thursday.
Barbara Fried, the mother of FTX founder Sam Bankman-Fried, arrives for his arraignment and bail hearings at Manhattan Federal Court on December 22, 2022 in New York City.
Michael M. Santiago | Getty Images
FTX’s collapse was precipitated when reporting by CoinDesk revealed a highly concentrated position in self-issued FTT coins, which Bankman-Fried’s hedge fund Alameda Research used as collateral for billions in crypto loans. Binance, a rival exchange, announced it would sell its stake in FTT, spurring a massive withdrawal in funds. The company froze assets and declared bankruptcy days later. Charges from the SEC and CFTC indicated that FTX had commingled customer funds with Alameda Research and that billions in customer deposits had been lost along the way.
Cheng Xin | Getty Images
Okta on Tuesday topped Wall Street’s third-quarter estimates and issued an upbeat outlook, but shares fell as the company did not provide guidance for fiscal 2027.
Shares of the identity management provider fell more than 3% in after-hours trading on Tuesday.
Here’s how the company did versus LSEG estimates:
- Earnings per share: 82 cents adjusted vs. 76 cents expected
- Revenue: $742 million vs. $730 million expected
Compared to previous third-quarter reports, Okta refrained from offering preliminary guidance for the upcoming fiscal year. Finance chief Brett Tighe cited seasonality in the fourth quarter, and said providing guidance would require “some conservatism.”
Okta released a capability that allows businesses to build AI agents and automate tasks during the third quarter.
CEO Todd McKinnon told CNBC that upside from AI agents haven’t been fully baked into results and could exceed Okta’s core total addressable market over the next five years.
“It’s not in the results yet, but we’re investing, and we’re capitalizing on the opportunity like it will be a big part of the future,” he said in a Tuesday interview.
Revenues increased almost 12% from $665 million in the year-ago period. Net income increased 169% to $43 million, or 24 cents per share, from $16 million, or breakeven, a year ago. Subscription revenues grew 11% to $724 million, ahead of a $715 million estimate.
For the current quarter, the cybersecurity company expects revenues between $748 million and $750 million and adjusted earnings of 84 cents to 85 cents per share. Analysts forecast $738 million in revenues and EPS of 84 cents for the fourth quarter.
Returning performance obligations, or the company’s subscription backlog, rose 17% from a year ago to $4.29 billion and surpassed a $4.17 billion estimate from StreetAccount.
This year has been a blockbuster period for cybersecurity companies, with major acquisition deals from the likes of Palo Alto Networks and Google and a raft of new initial public offerings from the sector.
Okta shares have gained about 4% this year.
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