If you spent past week taking a break from the FTX saga, no one can blame you. There were wines to mull, chestnuts to roast, partridges to deposit in their proverbial pear trees.
But US prosecutors clearly weren't checking out early this Christmas, and the FTX plot is thickening.
Here's the deal: While Bankman-Fried was busy negotiating a way out of his Bahamian jail cell (more on that in a minute), two of his former business partners were making deals of their own.
Caroline Ellison, the 28-year-old former CEO of the crypto hedge fund Alameda (who also used to date SBF), pleaded guilty to fraud and conspiracy charges, saying that she and others at the company knowingly stole billions of dollars from customers of Bankman-Fried's FTX exchange and sought to cover it up.
"I am truly sorry for what I did," Ellison told the court, according to a transcript. "I knew that it was wrong."
From July through October this year, she told the court, Ellison agreed with Bankman-Fried and others to provide "materially misleading financial statements to Alameda's lenders," and prepared balance sheets that concealed the extent of Alameda's borrowing.
Piling on: Gary Wang, FTX's former chief technology officer, pleaded guilty to four counts of similar charges.
Wang told the court that part of his role at FTX included making changes to the exchange's code that would grant Alameda "special privileges" on FTX.
"I executed those changes…knowing that others were representing to investors and customers that Alameda had no such special privileges and people were likely investing in and using FTX based in part on those misrepresentations."
"I knew what I was doing was wrong," he added.
Wang pleaded guilty to four criminal counts.
Under federal sentencing guidelines, Ellison could face up to 110 years in prison, while Wang could face up to 50 years. Both are cooperating with federal prosecutors under plea deals that would virtually guarantee them lighter sentences.
Based on what Ellison and Wang have said so far, they could become damning witnesses against Bankman-Fried, who has repeatedly denied intentionally defrauding customers and investors. Their cooperation, as high-level executives within the now-defunct crypto empire, could also inspire others to come forward.
Ellison and Wang are both out on bail as part of their plea agreements.
Meanwhile, SBF caught a flight out of the Bahamas after agreeing to give up his extradition fight.
On Thursday, a federal judge released him on a $250 million bond, forcing him to surrender his passport and remain under house arrest at his parents' home in Palo Alto, California.
(While that's an extraordinary sum, Bankman-Fried won't have to pay it unless he violates the terms of his bail or fails to show up to court. It's an atypical bail plan, granted to SBF in exchange for dropping his extradition fight.)
SBF didn't waste any time heading home to California. Shortly after leaving court, he was spotted in the business class lounge at JFK airport. He'll be arraigned on eight criminal counts including fraud and conspiracy at an unspecified future date.
BOTTOM LINE
SBF sure caught a break when he agreed to come back to the US to face the music (staying in the Bahamas to fight extradition would have kept in an overcrowded, filthy prison there for months, if not years, according to lawyers I've spoken to). But getting a bail deal in the US that lets him stay with mom and dad may be the last break he catches in what is likely to be a long legal drama.
It's hard to imagine a scenario in which SBF's lawyers can refute corroborated testimony from two of the most tapped-in members of his companies' leadership team. The hapless-boy-wonder narrative starts to fall apart when key witnesses are saying, under oath, "yes we did the fraud, we knew it was fraud, and Sam was calling the shots."
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