Sam Bankman-Fried pleads not guilty to federal fraud charges in New York

Sam Bankman-Fried pleaded not guilty in federal court in New York on Tuesday to eight counts related to the collapse of his former crypto exchange FTX and hedge fund Alameda Research.

The former crypto billionaire has been charged with conspiracy to commit wire fraud and securities fraud, individual charges of securities fraud and wire fraud, money laundering and conspiracy to circumvent the campaign finance regulations.

The trial will begin on October 2.

Bankman-Fried arrived outside the courthouse in a black SUV and was swarmed by cameras as soon as his vehicle arrived. The melee grew so thick that Bankman-Fried’s mother couldn’t get out of the vehicle, falling onto the wet sidewalk as cameras scrambled to catch a glimpse of her son.

Bankman-Fried was carried by security through the crowd and into the courthouse within moments, with photographers scrambling to get out of the way.

Earlier in the day, Bankman-Fried’s attorneys filed a motion to seal the names of two people who had secured Bankman-Fried’s release on bail with a bond. They claimed that the visibility of the case and the defendant had already put Bankman-Fried’s parents at risk and that guarantors should not be subjected to the same scrutiny. Kaplan approved the motion in court.

Federal prosecutor Danielle Sassoon told the court that Bankman-Fried worked with foreign regulators to transfer assets that FTX’s U.S. management tried to recover through the Chapter 11 bankruptcy process.

Bahamian regulators and US attorneys for FTX have been fighting for weeks in Delaware bankruptcy court over hundreds of millions, if not billions, of cryptocurrency dollars. FTX lawyers insist Bahamian regulators illegally transferred hundreds of millions of dollars and that Bankman-Fried aided them.

Bahamian regulators say local laws give them jurisdiction over those assets and dispute the validity of the U.S. Chapter 11 proceeding.

Federal prosecutors appear to agree with US attorneys for FTX. Sassoon asked Kaplan to impose a new restriction prohibiting Bankman-Fried from transferring or accessing FTX client assets. The judge also approved this request.

Bankman-Fried returned to the United States from the Bahamas on December 21 and the next day was released on $250 million bail, secured by his family home in California.

Federal prosecutors also announced the launch of a new task force to recover victims’ assets as part of an ongoing investigation into Bankman-Fried and the collapse of FTX.

“The Southern District of New York is working around the clock to respond to the FTX implosion,” U.S. Attorney Damian Williams said in a statement Tuesday.

The SDNY U.S. Attorney’s Office had argued that Bankman-Fried used $8 billion in client assets for lavish real estate purchases and vanity projects, including stadium naming rights and millions in political donations .

Federal prosecutors filed the indictment against Bankman-Fried with unusual speed, consolidating the criminal charges against the 30-something within weeks. The federal charges were accompanied by complaints from the Commodity Futures Trading Commission and the Securities and Exchange Commission.

They were assisted by two of Bankman-Fried’s closest allies, Caroline Ellison, former CEO of his hedge fund Alameda Research, and Gary Wang, who co-founded FTX with Bankman-Fried.

Ellison, 28, and Wang, 29, pleaded guilty on Dec. 21. Their plea deals with prosecutors came after rampant speculation that Ellison, Bankman-Fried’s former romance partner, was cooperating with federal investigations.

Another former FTX executive, Ryan Salame, apparently first alerted regulators to alleged wrongdoing within FTX. Salame, a former co-CEO of FTX, reported “possible mismanagement of client assets” to Bahamian regulators two days before the crypto exchange filed for bankruptcy, according to a Securities Commission filing. of the Bahamas.

Bankman-Fried has been accused by federal law enforcement and financial regulators of carrying out what the SEC has called one of the largest and most “brazen” frauds in recent memory. His stunning downfall was precipitated by news reports that raised questions about the nature of his hedge fund’s track record.

In the weeks since FTX filed for bankruptcy on Nov. 11 in Delaware, the extent of Bankman-Fried’s alleged wrongdoing has come to light. Replacement CEO John J. Ray said there was a “complete failure of corporate control.”

Bankman-Fried was charged in federal court in New York on December 9 and arrested by Bahamian law enforcement at the request of US prosecutors on December 12. Following his indictment, Bankman-Fried’s legal team in the Bahamas flip-flopped on whether or not their client would consent to extradition.