And she’s not alone, either. Alameda Research CEO Caroline Ellison’s absence from the indictment against Sam Bankman-Fried over the collapse of FTX — and her presence in Manhattan’s shopping district — fueled speculation that SBF’s former girlfriend had cut a deal with the Department of Justice. Ellison’s role in the Alameda side of the meltdown made her continued freedom in the US a suspicious contrast to her former boyfriend’s Bahamian detention and extradition fight.

The speculation in this case proved accurate — and it turns out that Bankman-Fried’s other partner has also cut a plea deal, the New York Times reported late last night:

Two former top executives of Sam Bankman-Fried’s crypto trading empire have pleaded guilty to federal charges and are cooperating in the criminal case against the disgraced crypto entrepreneur, the U.S. attorney for the Southern District of New York said on Wednesday night.

The two are Caroline Ellison, who was the chief executive of Mr. Bankman-Fried’s crypto trading company, Alameda Research, and Gary Wang, a founder of the crypto exchange FTX. …

The guilty pleas by Ms. Ellison and Mr. Wang could push other former executives to cooperate with the authorities in the case against Mr. Bankman-Fried, who has been charged with fraud, money laundering and campaign finance offenses.

What kind of a deal did the two partners — or perhaps more pertinently, “co-conspirators” — get in exchange for their testimony? Thus far no one’s talking about the particulars, but Wang’s attorney told reporters that his client had “accepted responsibility for his actions.” That suggests that their plea deals involve more than just immunity in exchange for their testimony. If it’s not accompanied by some significant jail time and restitution, that may not make the vast pool of victims happy with the DoJ.

That seems especially true for Ellison. Bankman-Fried owned 90% of Alameda Research, but Ellison ran it. The money disappeared into Alameda, which means that Ellison almost certainly had a real role in the destruction of billions in FTX depositor funds, and likely has a pretty good idea where it went. If Ellison can’t make significant restitution, then her testimony had better force Bankman-Fried to do so, or else prosecutors will need to explain Ellison’s coming shopping trips in Manhattan.

If the DoJ doesn’t know that, the SEC certainly does, although they’re limited to civil actions:

The Securities and Exchange Commission also filed civil fraud charges against Ms. Ellison and Mr. Wang on Wednesday. The S.E.C. said that Ms. Ellison, 28, had misused FTX customer deposits to fund Alameda’s trading activity and that Mr. Wang, 29, had created software that allowed that diversion of funds to take place. The S.E.C. case builds on civil charges filed against Mr. Bankman-Fried, 30, this month. …

Sanjay Wadhwa, deputy director of the S.E.C.’s Division of Enforcement, said Mr. Bankman-Fried, Ms. Ellison and Mr. Wang “were active participants in a scheme to conceal material information from FTX investors, including through the efforts of Mr. Bankman-Fried and Ms. Ellison to artificially prop up the value of FTT.”

Translation: These two are going to do time, because they were active actors in the scam. With the SEC making a major-fraud case against Ellison and Wang, there’s no way the DoJ can let them walk in exchange for testimony. Ellison and Wang are just trying to limit their sentences, and they’re tossing their buddy to the wolves to save their own skin. And likely the other execs at FTX and Alameda too, unless their attorneys start looking for plea deals quickly.

The cooperation of these founders also threaten to expand the story even further into politics. Before reporting this story, the NYT’s Blake Hounshell had run an update on the scandal and its political implications, noting that politicians of both parties seemed curiously uninterested in discussing it:

It’s hard to quickly sum up the extent of the influence operation Bankman-Fried, 30, and his associates built during his meteoric ascent. My colleagues have described it as “a network of political action committees, nonprofits and consulting firms” that “worked to court politicians, regulators and others in the policy orbit.” …

For the Democrats who are embarrassed by taking dirty money, perhaps the only blessing of this scandal might be that it’s a bipartisan one.

That might be why, as Michael Schaffer noted in an astute column for Politico written before Bankman-Fried’s indictment, the two parties aren’t firing at each other in Washington. The city’s “polarized political-media ecosystem can’t do much with a potential scandal,” he wrote, “if there’s no partisan advantage to drive it.”

That has been easier to do while Ellison and Wang clammed up, even if Bankman-Fried had diarrhea of the mouth until the Bahamas finally shut him up. Let’s not forget that he planned to testify to Congress on the day Bahamian police arrested him in cooperation with the DoJ, apparently believing that he could talk his way out of trouble — and/or that his political beneficiaries would want to facilitate that outcome.

By the way, Bankman-Fried’s back in the US now, too:

Sam Bankman-Fried is being extradited to the United States from his home in the Bahamas, to face a long list of charges related to the downfall of the crypto exchange he founded, FTX.

The 30-year-old is in FBI custody and on his way back to the United States, the U.S. Attorney for the Southern District of New York, Damian Williams, said in a video posted to Twitter late Wednesday. He will appear before a judge “as soon as possible,” Williams also said.

If Ellison and Wang start telling the stories that the DoJ, SEC, and FEC want them to tell, then Katy bar the door in the Beltway. Bankman-Fried might be thinking that talking even more can’t hurt him now, and it might just pressure his former pals into action on his behalf. SBF’s politicians may have no choice but to start making their own public defenses. Get the popcorn ready.