FTX’s Sam Bankman-Fried Pleads Not Guilty To Fraud Charges

The legal drama surrounding former crypto multi-billionaire Sam Bankman-Fried continues this week, after his trial was scheduled to begin on 2 October this year.

Former CEO and co-founder of FTX, Bankman-Fried pleaded not guilty to federal fraud charges in New York on Tuesday – less than two months after the collapse of the crypto exchange, when a multi-billion dollar hole was found in its balance sheet.

Just before Christmas and following his extradition to the United States from the Bahamas, Bankman-Fried was freed on a $250m bail, but was ordered to remain under strict supervision at his parents’ home in Palo Alto, California, and wear an ankle bracelet.

Not guilty

But now on Tuesday Bankman-Fried pleaded not guilty in a Manhattan federal court where he faces eight criminal counts, including wire fraud and money laundering conspiracy.

He has been charged by the SEC of concealing his diversion of FTX customers’ funds to crypto trading firm Alameda Research, while raising more than $1.8 billion from investors, including approximately $1.1 billion from approximately 90 US-based investors.

Meanwhile Damian Williams, the US Attorney for the Southern District of New York, has previously described the fraud as among the largest in US history.

The DoJ has charged Bankman-Fried with conspiracy to commit wire fraud, wire fraud, conspiracy to commit commodities fraud, conspiracy to commit securities fraud, conspiracy to commit money laundering.

Bankman-Fried has also been charged with conspiracy to defraud the Federal Election Commission and commit campaign finance violations.

“Customer funds were also used and laundered through political donations, charitable donations and a variety of venture investments,” Danielle Sassoon, a federal prosecutor, was quoted by Reuters as saying at the hearing.

Witness co-operation

Sassoon reportedly suggested that the government has a deep well of evidence against Bankman-Fried, saying prosecutors will turn over hundreds of thousands of documents in coming weeks to the defence.

US prosecutors have already secured guilty pleas from two former top associates of Bankman-Fried’s – former Alameda chief executive Caroline Ellison and former FTX chief technology officer Gary Wang – who are co-operating with prosecutors and may testify at trial.

Caroline Ellison 28, former CEO of Alameda Research (and Bankman-Fried’s ex-girlfriend), and Gary Wang 29, co-founder of FTX, pleaded guilty to defrauding investors in the crypto trading platform.

It has also been previously reported that US prosecutors have a dozen co-operating witnesses in the case so far, and they have access to encrypted text messages sent between employees.

According to Reuters, Bankman-Fried did not speak to the judge during the hearing, but conferred privately with his lawyers.

He reportedly shook hands with one of the prosecutors before the arraignment.

When it ended, he approached the handful of courtroom sketch artists and commented on their work, Reuters reported.

Tom Jowitt

Tom Jowitt is a leading British tech freelancer and long standing contributor to Silicon UK. He is also a bit of a Lord of the Rings nut...

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