SEC Settles with FTX Insiders, Bars Them from Corporate Leadership

The SEC filed proposed final consent judgments in the U.S. District Court for the Southern District of New York against former Alameda Research CEO Caroline Ellison, former FTX CTO Gary Wang, and former FTX Head of Engineering Nishad Singh. Without admitting or denying the Commission’s allegations, the trio agreed to a suite of prohibitions designed to remove them from positions of corporate influence. The most significant are multi-year officer-and-director bars for publicly traded companies. Ellison, who pleaded guilty to wire fraud, securities fraud, and money laundering, accepted the harshest term: a 10-year ban from serving in corporate leadership positions.

Gary Wang and Nishad Singh each agreed to eight-year officer-and-director bars. All three also consented to prohibitions on future violations of securities laws and temporary conduct-based injunctions. Specific restrictions on securities transactions were outlined, particularly for Ellison, who agreed not to engage in securities transactions outside of personal accounts. These settlements represent the SEC’s primary tool for protecting investors by preventing individuals implicated in fraud from returning to steward public companies, effectively ending their careers in corporate leadership for the foreseeable future.

The regulatory settlements follow criminal cases where cooperation was the defining factor in judicial leniency. Ellison, Wang, and Singh all struck cooperation agreements with federal prosecutors before Sam Bankman-Fried’s trial began. Their testimony was instrumental in shaping the government’s case, directly leading to Bankman-Fried’s conviction on seven fraud and conspiracy counts for stealing at least $8 billion in customer funds. This cooperation translated into dramatically reduced prison sentences compared to the decades they initially faced.

Caroline Ellison was sentenced to just two years in prison and was released this week after serving 11 months, despite charges that carried a potential 110-year sentence. Gary Wang and Nishad Singh avoided prison altogether, receiving sentences of time served and three years of supervised release. At their sentencing hearings, U.S. District Judge Lewis Kaplan commended their cooperation, stating, “You did the right thing.” FTX’s post-collapse CEO, John J. Ray III, even advocated for Singh’s leniency, describing his assistance as crucial for maximizing recoveries for the exchange’s creditors.

The SEC’s proposed settlements with Ellison, Wang, and Singh conclude major regulatory actions against the core operational team that enabled the FTX and Alameda Research fraud. Their admissions, though not formal denials of the SEC’s claims, coupled with the enforceable bans, allow regulators to draw a line under their direct involvement. This action underscores a regulatory focus on individual accountability, even when cooperators have already faced criminal consequences.

The contrast with Sam Bankman-Fried’s fate remains stark. The former FTX CEO, who maintains his innocence and is pursuing an appeal, was sentenced to 25 years in prison. His recent public claims, including a document shared on his X account in October arguing FTX was never insolvent, have done nothing to sway the legal outcomes. The settlements with his former lieutenants finalize their legal reckoning, leaving them with their freedom but without the corporate authority they once held, as the sprawling fallout from one of history’s largest financial frauds continues to settle.