FTX founder Sam Bankman-Fried pleads not guilty to fraud

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NEW YORK – FTX founder Sam Bankman-Fried pleaded not guilty in Manhattan federal court on Tuesday to charges that he defrauded investors and misled customers’ investments on his cryptocurrency trading platform when a judge set a trial date for October.

Bankman-Fried, 30, denied charges accusing him of illegally diverting large sums of client money from FTX to make large property purchases, giving money to politicians and risky trades made at Alameda Research, his cryptocurrency hedge fund trading company.

Read More: FTX founder Sam Bankman-Fried charged with fraud by SEC after arrest in Bahamas

Bankman-Fried’s attorney, Mark Cohen, announced his client’s plea, saying: “He is pleading not guilty to all counts. “

Afterward, Judge Lewis A. Kaplan set a tentative trial date for Oct. 2, saying it could be moved forward or back a day or two. A prosecutor estimated it would take a month for the government to present its case to a jury, while a defense attorney expected to present a case that would last two to three weeks.

Read More: Sam Bankman-Fried could face up to 115 years in prison, if convicted

Wearing a backpack, Bankman-Fried marched through a crush of cameras as he entered the courthouse on a rainy day to make his first appearance before Kaplan. In the courtroom, Bankman-Fried appeared relaxed during most of the half-hour proceedings, sometimes talking to a lawyer next to him. When he left court, he did not speak to reporters outside.

After Bankman Fried pleaded not guilty, the judge told attorneys on a schedule to proceed to trial, setting April deadlines for defense attorneys to submit arguments. to challenge the validity of the charges and for prosecutors to respond to them. Oral arguments were set for May 18.

The judge also added to Bankman-Fried’s bail conditions by barring him from accessing or transferring digital currency or assets of FTX or Alameda Research or any assets purchased with funds from the companies.

He did so after Assistant US Attorney Danielle Sassoon said Bankman-Fried had worked with foreign regulators to transfer FTX assets to them after FTX declared bankruptcy and knew that US bankruptcy authorities are also interested in that fund.

Sassoon said Bankman-Fried told a co-buyer that he knew there was competition between US bankruptcy authorities and foreign regulators and that he wanted to get the assets to the foreign regulators in part because he thought they would be more lenient with him. he may be able to regain control of his business.

Read More: Sam Bankman-Fried’s enablers are also worthy of investigation

But Cohen insisted that Bankman-Fried had not transferred any assets personally and that whatever was transferred came after a court in the Bahamas ordered it to happen.

Sassoon, noting that FTX is the second largest cryptocurrency exchange, told the judge that the government hoped to create a website for the victims of the fraud, rather than inform them of them. themselves because they would probably be over a million.

Read More: Sam Bankman-Fried is in trouble, but there is no crypto crack in sight

Before Bankman-Fried’s appearance, his lawyers sent a letter to the judge, saying that Bankman-Fried’s parents – both professors at Stanford Law School, in recent weeks have become the target of ” intense media scrutiny, harassment and threats. They said the parents had received “a constant stream of threatening letters, including communications expressing a desire for them to suffer physical harm.”

As a result, the attorneys requested that the names be redacted on court documents for two people involved in signing Bankman-Fried’s $250 million personal recognizance bond. Bankman-Fried was released with electronic monitoring about two weeks ago on the condition that he remain on probation at his parents’ house in Palo Alto, California.

The judge allowed the names to remain confidential for now, but said he may reconsider his decision if members of the media or others object.

Carolyn Ellison, 28, who ran Alameda, and Gary Wang, 29, who co-founded FTX, have pleaded guilty to fraud charges and are cooperating with prosecutors in a bid for clemency. Both are free on bail.

Their requests were kept secret until Bankman-Fried was in the air after he flew out of the Bahamas, where FTX is based, because of fears he might flee.

Shortly before Bankman-Fried’s impeachment, US Attorney Damian Williams announced that he was launching a task force made up of senior prosecutors in his office to investigate matters related to the FTX collapse. investigate and prosecute. He said the task force will also work to trace and recover victims’ assets.

“The Southern District of New York is working around the clock to respond to the FTX explosion,” Williams said in a news release. “It’s hands on deck time. We are launching the SDNY FTX Task Force to ensure that this urgent work, powered by all of SDNY’s resources and expertise, continues until justice is served.”

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