Sam Bankman-Fried pleads not guilty in FTX fraud case; October trial set

NEW YORK, Jan 3 (Reuters) – Sam Bankman-Fried pleaded not guilty on Tuesday to criminal charges of misleading investors in his now bankrupt cryptocurrency exchange FTX and causing billions of dollars in losses, in what prosecutors called it an “epic” fraud.

He pleaded in federal court in Manhattan where he faces eight counts, including wire fraud and money laundering conspiracy. The 30-year-old ex-tycoon is accused of looting deposits from FTX clients to support his hedge fund Alameda Research, buy real estate and donate millions of dollars to political causes.

“Client funds were also used and laundered through political donations, charitable donations and various venture capital investments,” Danielle Sassoon, federal prosecutor, said during the hearing.

Sassoon suggested the government had a wealth of evidence against Bankman-Fried, saying prosecutors would turn over hundreds of thousands of documents to the defense in the coming weeks.

U.S. District Judge Lewis Kaplan on Tuesday set a trial date for Oct. 2, which Sassoon said could last four weeks.

The government has already secured guilty pleas from two former Bankman-Fried associates — former Alameda chief executive Caroline Ellison and former FTX chief technology officer Gary Wang — who are cooperating with prosecutors and could testify at trial.

A clean-shaven Bankman-Fried wore a blue suit, white shirt and blue polka-dot tie and carried a backpack around the courthouse – a far cry from the shorts and t-shirts that were his favorite outfit when he ruled FTX from the Bahamas.

Bankman-Fried did not speak to the judge during the hearing, but spoke privately with his attorneys. He shook hands with one of the prosecutors before the arraignment. At the end, he approached the handful of cartoonists in the courtroom and commented on their work.

The Massachusetts Institute of Technology graduate could face 115 years in jail if found guilty. He previously admitted to making mistakes at FTX, but said he did not believe he had any criminal liability.

” SOFTER “

Bankman-Fried took advantage of a boom in the value of bitcoin and other digital assets to build an estimated net worth of $26 billion and become an influential political donor in the United States.

FTX collapsed in early November after a wave of withdrawals and declared bankruptcy on November 11, wiping out Bankman-Fried’s fortune. He later said he had $100,000 in his bank account.

He was extradited last month from the Bahamas, where he lived and where the exchange was based.

Since his release on $250 million bail on Dec. 22, Bankman-Fried has been electronically monitored and forced to live with his parents, Joseph Bankman and Barbara Fried, both professors at Stanford Law School in California. Fried attended his son’s hearing on Tuesday.

On Tuesday, Kaplan imposed a new bail condition, saying Bankman-Fried could not access FTX or Alameda assets.

It came after Sassoon accused Bankman-Fried of seeking to transfer assets to an unnamed foreign country which he thought was “more lenient”. She said prosecutors are also investigating reports late last month that funds were moved out of Alameda cryptocurrency wallets, though she said there was no evidence. that Bankman-Fried executed these transactions.

Mark Cohen, Bankman-Fried’s attorney, said his client “did not make” the Alameda transfers. Referring to the accusation that Bankman-Fried was seeking to transfer money overseas, he said his client had sought to comply with an order from a court in the Bahamas, which last month temporarily seized certain assets of FTX.

The Bahamas Securities Commission (SCB) – the Caribbean nation’s financial regulator – did not immediately respond to a request for comment.

In November, SCB ordered Bankman-Fried and Wang to transfer the assets under their control, the commission’s executive director, Christina Rolle, said in an affidavit filed Dec. 29 in the Bahamas Supreme Court. The Bahamas has appointed liquidators to end FTX’s international trading activities.

Kaplan also granted Bankman-Fried’s request Tuesday not to release the names of two additional co-signers for the bond.

Lawyers for Bankman-Fried said her parents, who co-signed the bond, had received physical threats since the collapse of FTX, and that other co-signers could face similar harassment.

Reporting by Jack Queen and Luc Cohen in New York Additional reporting by Jonathan Stempel in New York Editing by Noeleen Walder and Matthew Lewis

Our standards: The Thomson Reuters Trust Principles.

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