Sam Bankman-Fried, the founder and former CEO of collapsed cryptocurrency exchange FTX, appeared in federal court in Manhattan Tuesday afternoon and pleaded not guilty to eight counts of customer fraud, money laundering and violation of campaign finance laws. Bankman-Fried’s trial was set for October 2; if he is found guilty on all counts, he faces up to 115 years in prison.
Bankman-Fried, 30, was arrested in the Bahamas, where FTX is based, on December 12 and extradited to the US, the largest in US history. Under the terms of the package, he has been confined to his parents’ home in Palo Alto, California.
An unsealed indictment said the crypto entrepreneur “knowingly devised” a scheme to defraud his clients. a United States attorney saying at a press conference that FTX was “one of the largest financial frauds in the history of the United States” and that Bankman-Fried used the allegedly stolen money “for his personal gain.”
In November, after investors rushed to withdraw their funds from FTX fearing it would collapse, the company filed for bankruptcy and Bankman-Fried resigned as CEO. It later emerged that the cryptocurrency exchange had been moving client money to Alameda Research, a cryptocurrency hedge fund owned by Bankman-Fried.
Still, he protested that he was innocent. At the end of November, he showed up at a conference organized by the New York Times and said: “I never tried to commit fraud with anyone.” He blamed FTX’s collapse on poor record keeping and non-existent risk management.
John Ray, the new CEO of FTX, had said that $7 billion is missing in the company. Bankman-Fried allegedly laundered the stolen funds and violated campaign finance laws by making donations on behalf of others.
Two of Bankman-Fried’s key associates, FTX co-founder Gary Wang, 29, and former Alameda co-CEO Caroline Ellison, 28, have pleaded guilty to federal fraud charges. Once housemates and close friends of Bankman-Fried (Ellison was reportedly romantically linked to the businessman), the two are now cooperating witnesses assisting the US government’s investigation into FTX. According to Ellison’s unsealed document guilty plea transcriptAlameda had secretly loaned billions to top FTX leaders.
Along with the criminal investigation, Bankman-Fried faces civil lawsuits from the Securities and Exchange Commission and the Commodity Futures Trading Commission, which oversees the derivatives market. In addition to seeking redress for FTX clients who lost their money, the agencies want to bar Bankman-Fried from acting as a director or officer of any company in the future.
