The story of the FTX empire's collapse has received one final chapter. Caroline Ellison, former head of the trading firm Alameda Research, and Gary Wang, co-founder and lead developer of the exchange, have fully settled all claims from U.S. regulators. On Wednesday, a federal court in New York approved the agreed-upon orders, putting an end to the years-long proceedings that began shortly after the exchange's collapse in November 2022.
No fines, only bans
The U.S. Commodity Futures Trading Commission (CFTC) did not seek additional compensation or civil penalties from the defendants. Instead, the regulator focused on restrictions on professional activities. Ellison received a five-year ban on trading and a ten-year ban on industry registration. For Wang, the terms were similar: five years of trading restrictions and eight years on registration.
These sanctions are retroactive and have been in effect since December 2022, when the court first found them guilty of fraud. In practice, this means Ellison will be able to return to trading activity as early as late 2027, while Wang's registration ban will expire in 2030. For Ellison, the full lifting of restrictions will occur in 2032.
Why did the regulator take such a lenient approach? The answer is obvious: both defendants played a key role in exposing Sam Bankman-Fried's scheme. Their cooperation with investigators was a decisive factor, and their criminal case obligations already include the payment of $11.02 billion. As CFTC Enforcement Director David Aye emphasized, the nature of the sanctions reflects the "substantial assistance" that Ellison and Wang provided to the commission in investigations related to FTX.
A contrast of fates: cooperation versus resistance
Notably, the SEC previously took a similar approach, imposing long-term position bans without additional fines. Ellison received ten years of restrictions at that time, while Wang received eight. The complete alignment with the current CFTC decisions only underscores the consistency of the regulators' actions.
The fates of the key prosecution witnesses have unfolded differently, but generally favorably. Ellison, sentenced to two years, actually served only 14 months and was released in January. Wang avoided prison entirely: in November 2024, Judge Lewis Kaplan ruled that the time spent in pretrial detention already covered the sentence, noting an unprecedented level of cooperation.
A very different fate befell Sam Bankman-Fried. He bet on fighting and lost: 25 years in prison became final after an appellate court upheld the verdict in August. The former billionaire is left with only faint hopes for the Supreme Court or a presidential pardon, against which senators from both parties have already spoken out.
The FTX story is nearly complete. Asset liquidation is coming to an end, with only one dispute over claims remaining in the bankruptcy case. The insiders who pointed to the main culprit are building new lives. The only question is whether Bankman-Fried himself will ever be able to follow their example.
My take: This ending is a vivid illustration of how the American legal system incentivizes cooperation in white-collar crimes. The leniency of the CFTC and SEC toward Ellison and Wang is not an act of mercy but a pragmatic calculation: without their testimony, sentencing SBF to 25 years would have been practically impossible. For the market, this is a signal: even in the most high-profile collapses, the path to a reduced sentence lies through admission and cooperation with justice, not through denial of the obvious.