SEC Seeks Long-Term Bans for Former FTX Executives

The Securities and Exchange Commission (SEC) has filed proposed final consent judgments aimed at enforcing officer-and-director bans on three former executives of FTX, who provided testimony against Sam Bankman-Fried. Caroline Ellison faces a proposed ten-year ban, while Gary Wang and Nishad Singh are set to receive eight-year restrictions.

Key Takeaways

The SEC is seeking significant officer-and-director bans for former FTX executives: 10 years for Caroline Ellison and 8 years for Gary Wang and Nishad Singh.
These executives provided critical testimony during Sam Bankman-Fried’s trial but still face permanent injunctions barring them from future violations.
Their cooperation led to various sentencing outcomes; Ellison received a two-year sentence, while Wang and Singh were not sentenced to additional prison time.
FTX’s bankruptcy process is providing returning amounts to creditors, with some receiving up to 143% of their claims.

SEC Seeks Long-Term Bans for Former FTX Executives

These legal filings were made in Manhattan federal court and formalize settlement conditions for the executives who cooperated significantly with prosecutors during Bankman-Fried's criminal trial. However, they still face long-lasting sanctions under securities law.

Ellison, Wang, and Singh have agreed to permanent injunctions that prevent them from violating federal antifraud laws, along with five-year restrictions based on their conduct, as noted in SEC Litigation Release 26450.

It's important to highlight that these proposed judgments require approval from the court before they come into effect.

The recent SEC enforcement action was executed by Amy Burkart, with support from investigators including Devlin Su, Ivan Snyder, David Brown, Brian Huchro, and Pasha Salimi, under the guidance of Laura D’Allaird and Amy Flaherty Hartman from the Cyber and Emerging Technologies Unit.

FTX Executives Agree to Permanent Injunctions

The SEC’s initial complaints claimed that from May 2019 to November 2022, the former executives raised over $1.8 billion from investors by making false assertions about FTX’s safety measures and risk controls.

Prosecutors accused Bankman-Fried, Wang, and Singh of allowing Alameda Research to bypass automated risk mitigation practices, giving the trading firm unrestricted access to customer deposits.

Wang and Singh developed software that misappropriated FTX customer funds to Alameda, while Ellison directed the misused assets toward the trading operations of the hedge fund.

Bankman-Fried later transferred hundreds of millions in additional customer funds to Alameda for personal loans and venture capital investments.

The defendants agreed to final judgments without admitting or denying the SEC’s allegations. They also consented to permanent antifraud injunctions under the Securities Exchange Act Section 10(b) and Securities Act Section 17(a), along with conduct-based restrictions to prevent future misconduct for five years.

Cooperation Results in Varied Sentences

Recently, it was revealed that Ellison had served about 11 months at Danbury Federal Correctional Institution before her transfer to community confinement in October, with her projected release now anticipated for February 2026.

Judge Lewis Kaplan sentenced her to two years in prison, despite her defense’s plea for probation, stating that her cooperation was substantial but that the severity of the fraud warranted a prison sentence.

During her September 2024 sentencing, Ellison expressed profound remorse, stating, “On some level, my brain doesn’t even comprehend all the people I harmed.”

Although her attorneys requested no prison time, Judge Kaplan dismissed what he characterized as a “literal get-out-of-jail-free card,” noting the significance of her cooperation.

Federal prosecutors underscored Ellison’s vital testimony, emphasizing that the specifics of the crimes would have been challenging to establish without her three-day testimony at trial.

Ellison disclosed that Bankman-Fried instructed executives to invest billions in customer funds that had been secretly diverted from FTX through Alameda Research.

Wang and Singh received sentences that reflected time served, along with supervised release, after their testimony about Bankman-Fried directing the creation of a feature granting Alameda almost unrestricted access to customer funds.

Both avoided additional prison time due to their cooperation.

FTX Bankruptcy Distributes Returns to Creditors

FTX's Chapter 11 reorganization plan recommenced distributions in May 2025, enabling eligible creditors to receive between 119% and 143% of their verified claims through designated service providers like BitGo or Kraken.

Approximately 98% of users with claims under $50,000 received 119% of their reported funds as approved by the bankruptcy court's restructuring plan.

Bankman-Fried is currently incarcerated at a low-security Federal Correctional Institution in Terminal Island, Los Angeles, serving his 25-year sentence after being convicted on multiple counts of fraud and conspiracy.

Most recently, his November appeal hearing contested the assertion that he was “presumed guilty” and argued that he was deprived of a fair trial.

Simultaneously, his family is requesting presidential clemency, insisting that FTX had sufficient assets to fully reimburse all customers during the collapse.