Sam Bankman-Fried Pleads Not Guilty To Fraud Charges Tied To FTX Crisis

Key Points:

• The creator of the now-defunct cryptocurrency exchange FTX, Sam Bankman-Fried, entered a not-guilty plea to accusations that he stole millions of dollars worth of digital assets from consumers.
• Two of Bankman-former Fried’s top collaborators have already admitted guilt to the government, and they are cooperating with the prosecution and could testify at the trial.
• During the hearing, Bankman-Fried spoke with his attorneys in private rather than with the judge. He addressed the few courtroom sketch artists after it was over and offered some feedback on their work.

Sam Bankman-Fried, the creator of FTX, entered a not-guilty plea on Tuesday and will go on trial in October. This case is expected to be one of the most publicized white-collar fraud cases in recent memory.

Sam Bankman-Fried, the disgraced cryptocurrency executive, returned to New York and pleaded not guilty on Tuesday to charges that he engaged in widespread fraud and other crimes, nearly two weeks after he was released by a Manhattan judge on a $250 million bond and ordered to stay with his parents in Palo Alto, California.

The cryptocurrency exchange he started, FTX, collapsed as a result of BankmanFried’s -fraud, according to allegations made against him in Federal District Court, where he is currently being tried for his role in the massive losses suffered by his clients.

The former crypto billionaire was charged with conspiracy to commit wire fraud and securities fraud, as well as separate counts of securities fraud and wire fraud, money laundering, and conspiracy to circumvent laws governing campaign finance.

Bankman-Fried’s trial was scheduled to begin on October 2 before Judge Lewis Kaplan.

A swarm of cameras surrounded Bankman-Fried as soon as his black SUV pulled up outside the courthouse. Bankman-Fried’s mother was unable to get out of the car because of the crowd, and she fell to the wet sidewalk as cameras whirled around her in an attempt to capture a sight of her son.

Although the plea was expected, it gives the 30-year-old extra time, according to attorneys. Bankman-Fried will be able to properly prepare his next course of action after learning more about the prosecution’s case against him. The plea sets the case up for a protracted trial that might go on for at least four weeks.

According to federal prosecutor Danielle Sassoon, Bankman-Fried coordinated with foreign officials to transfer assets that FTX’s American management had been attempting to recoup through the Chapter 11 bankruptcy procedure.

Bahamian regulators contest the legitimacy of the Chapter 11 proceedings in the United States and assert that local laws grant them jurisdiction over those assets.

A battle over hundreds of millions, if not billions, of dollars worth of crypto has been going on in Delaware bankruptcy court for weeks between Bahamas regulators and FTX’s US attorneys. Attorneys for FTX believe that Bankman-Fried helped Bahamian regulators transfer hundreds of millions of dollars illegally.

The U.S. attorneys for FTX seem to concur with federal prosecutors. Sassoon requested that Kaplan establish a fresh prohibition against Bankman-Fried moving or gaining access to FTX client assets. The judge also granted such a motion.

In order to handle the investigation and prosecution of cases related to the collapse, a task force of senior prosecutors made up of members of units looking into money laundering, public corruption, securities, and commodities fraud, and transnational criminal enterprises have been formed, according to Manhattan US Attorney Damian Williams, who is leading the Bankman-Fried case. The task force will track and recover victim assets using the asset forfeiture and cyber capabilities of the office.

Bankman-Fried’s lawyers submitted a motion earlier in the day to have the identities of the two people who had promised to see him released on bail with a bond sealed. They argued that the guarantors shouldn’t be subjected to the same scrutiny because the defendant and the case’s public profile had already put Bankman-Fried’s parents at risk. In court, Kaplan granted the motion.

Judge Kaplan said he would approve the request, but he left the door open to revisiting it if there was a disagreement.

“I anticipate the possibility that the members of the media or others may wish to contest the sealing of that information,” Kaplan said.

On December 9, Bankman-Fried was charged in federal court in New York. Three days after, at the request of US prosecutors, Bahamas law enforcement detained Bankman-Fried. His legal team in the Bahamas wavered after his indictment on whether or not their client would agree to extradition.

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