As the federal inquiry into the collapse of FTX proceeds, former Alameda Research Chief Executive Officer Caroline Ellison has acquired the services of a former senior cryptocurrency regulator who worked for the United States Securities and Exchange Commission.
It was first reported by Bloomberg that Ellison had hired Stephanie Avakian, who had previously served as the enforcement director of the SEC. Avakian is the leader of the securities and financial services department at law firm WilmerHale. Bloomberg cites anonymous sources familiar with the situation as saying that Avakian and other WilmerHale attorneys will represent Ellison in this dispute.
From 2016 until 2022, Akavian served as the leader of a team at the Securities and Exchange Commission (SEC), where they worked on a number of high-profile lawsuits against significant firms and noteworthy persons. Elon Musk for tweeting misleading statements about a plan to take Tesla private, Elizabeth Holmes for making fraudulent claims to investors in order to raise $700 million for Theranos, and Facebook for misleading investors about the risks of misusing user data are among those who have been charged with wrongdoing.
During his time at the SEC, Akavian was also essential in improving cryptocurrency regulation. He led charges against companies such as Robinhood and Ripple Lab.
Ellison will be represented by Avakian and WilmerHale over the course of the federal investigation against her previous company, Alameda Research. Alameda Research was a trading firm and the corporate sibling of the defunct cryptocurrency exchange FTX.
According to the records filed in court, prior to FTX declaring for bankruptcy in November, Alameda borrowed $3.3 billion worth of funds from the cryptocurrency exchange and gave them to FTX founder Sam Bankman-Fried and firms he controlled so that they could cover losses and make hazardous investments.
Ellison has remained largely unavailable and silent for the majority of FTX’s decline, making him an enigmatic role in the company’s demise. While Bankman-Fried has openly pointed the finger of blame at Alameda in a number of interviews, Ellison has chosen to remain mute, as Bloomberg has pointed out. According to New York magazine, there has been a lot of speculation that she may be making a deal with the authorities and cooperating with them.
The Senate Banking Committee announced earlier this week that a subpoena will be issued for Mr. Bankman-testimony Fried’s if he does not appear before legislators the following week.
In a public statement to the ex-billionaire on Tuesday, Senate Banking Chairman Sherrod Brow said, “As the Founder and CEO of FTX Trading Ltd. at the time of its collapse and the founder, principal owner, and former CEO of Alameda Research, you must answer for the failure of both entities.” The failure of both companies was caused, at least in part, by the clear misuse of client funds and wiped out billions of dollars owed to over a million creditors.
