Sam Bankman-Fried pleaded not guilty to federal charges of defrauding investors in his bankrupt cryptocurrency exchange FTX.
Bankman-Fried is accused by the US Department of Justice of misusing billions of dollars in FTX customer funds to support his Alameda Research hedge fund, purchase real estate, and donate millions to political causes. Bankman-Fried pleaded not guilty to all eight charges, including wire fraud and conspiracy to commit money laundering.
Bankman-Fried entered his plea in Manhattan federal court before U.S. District Judge Lewis Kaplan. Kaplan, a “no-nonsense” judge who has presided over a number of high-profile cases, was recently appointed to replace Ronnie Abrams. Her husband was an FTX advisor last year, so she withdrew from the case citing a conflict of interest. Judge Kaplan scheduled the trial for October 2.
Judge Kaplan also granted Bankman-request Fried’s to redact the names of the two people who co-signed his bond. Bankman-Fried made the request out of concern for his parents’ safety, as they had recently faced harassment and threats. After being granted bail on a $250 million bond, he was remanded to their custody. He denied any involvement in the recent Alameda transfers while in their custody.
Following his arrest in the Bahamas, Bankman-Fried was extradited back to the United States and granted bail. He had remained on the island after the collapse of FTX, which was also located there. If convicted, Bankman-Fried faces up to 115 years in prison.
Even if everything goes well for Bankman-Fried, he will face legal challenges as his crypto empire unravels. A class action lawsuit filed by FTX customers, for example, demands that the remaining digital assets associated with Alameda and FTX be “earmarked solely for customers.”
The class action lawsuit’s plaintiffs contend that FTX’s loans to Alameda Research were “in direct violation of FTX’s own customer agreements and terms of service, as well as common law and basic principles of honesty and fair dealing.”
Meanwhile, a media and legal battle has erupted between FTX’s new US owners and Bahamas regulators. The conflict revolves around FTX’s internal systems, such as internal Slack messages and QuickBooks accounting software. While Bahamas liquidator Brian Simms claims he needs the data to close his side of the business, new FTX CEO John Ray III claims the request is “staggeringly broad.”
