Sam Bankman-Fried Pleads Not Guilty to Fraud and Other Financial Crimes
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FTX founder Sam Bankman-Fried pleaded not guilty to a series of financial crimes on Tuesday, appearing before a federal court in New York as part of his arraignment.
The disgraced crypto mogul faces eight criminal charges, which include wire fraud and money laundering. He is also charged with violating campaign finance law, allegedly making illicit campaign contributions worth tens of millions of dollars.
His time in court follows the unexpected collapse of FTX that rocked crypto to its core in November. A selloff in the exchange’s FTT token shook consumer confidence in FTX and led a bank run on the exchange. A rush of customer withdrawals created a liquidity crunch that forced the company to admit it did not hold one-to-one reserves of client assets, ultimately causing the exchange to disable withdrawals before filing for bankruptcy.
The U.S. Attorney’s Office for the Southern District of New York has accused Bankman-Fried of a scheme that involved misappropriating customer funds, as well as misleading investors and lenders. In pleading not guilty, Bankman-Fried attested to not breaking the law while managing FTX.
Bankman-Fried, a former icon of crypto, stepped down as CEO of FTX when the business filed for bankruptcy and faces a maximum sentence of up to 115 years in federal prison if he’s found guilty of charges brought against him.
Meanwhile, federal prosecutors have gone after others associated with FTX and Alameda Research, a trading firm owned by Bankman-Fried that allegedly received billions of dollars of customer funds to fuel its trades.
FTX co-founder Gary Wang and Caroline Ellison, the ex-CEO of Alameda Research, have pleaded guilty to financial crimes associated with FTX and are cooperating with investigations into Bankman-Fried and the defunct exchange, according to the U.S. Attorney’s Office for the Southern District of New York.
Bankman-Fried was arrested in the Bahamas just over two weeks ago and was extradited to the U.S. after spending several days at Fox Hill correctional center located in Nassau, a facility known for its harsh conditions.
After returning to the U.S., Bankman-Fried was released from custody as part of a $250 million bond agreement, in which his parents’ home in Palo Alto, California, was posted as collateral, the location where he is currently under house arrest.
Recently, Bankman-Fried returned to Twitter, posting for the first time since he was arrested. The FTX founder broke his silence on Friday to deny he was involved in the transfer of Alameda-linked funds which took place days after his release.
Less than a week ago, Bankman-Fried’s court case was reassigned to Judge Lewis A. Kaplan from Judge Ronnie Abrams. Abrams recused herself from overseeing Bankman-Fried’s case because of her husband’s work at a law firm as a partner that had advised FTX in 2021.
Attorney’s Mark Cohen and Christian Everdell were present at court on Tuesday, representing Bankman-Fried. Cohen previously worked on the legal team that represented convicted sex trafficker Ghislaine Maxwell.
This story is developing and will be updated.
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