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Bankman-Fried goes to court on FTX fraud charge

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By Jack Queen and Luc Cohen

NEW YORK (RockedBuzz via Reuters) – Sam Bankman-Fried arrived in a federal courtroom in Manhattan on Tuesday for his indictment, where he is expected to plead not guilty to criminal charges for deceiving investors in his now-bankrupt cryptocurrency exchange FTX.

Bankman-Fried is accused of looting billions of dollars in FTX client deposits to support his hedge fund Alameda Research, buy real estate and make millions of dollars in political contributions, in what prosecutors have called a fraud of epic proportions.

A clean-shaven Bankman-Fried entered federal courthouse in Manhattan wearing a blue suit, white shirt, and blue polka-dot tie while carrying a backpack at approximately 12:40 EST (1740 GMT).

The indictment is before US District Judge Lewis Kaplan.

A person familiar with the matter told RockedBuzz via Reuters last week that Bankman-Fried would plead not guilty. A Bankman-Fried attorney did not respond to a request for comment.

It is common for criminal defendants to initially plead not guilty. They may change their pleas later.

Bankman-Fried faces up to 115 years in prison if convicted.

The Massachusetts Institute of Technology graduate rode a boom in the value of bitcoin and other digital assets to build a net worth of approximately $26 billion and become an influential political donor in the United States.

But FTX collapsed in early November after a spate of withdrawals and filed for bankruptcy on Nov. 11, wiping out the Bankman-Fried fortune. He later said he had $100,000 in his bank account.

Bankman-Fried was extradited last month from the Bahamas, where he lived and where the exchange was based.

Since his December 22 release on bail, Bankman-Fried has been placed under electronic monitoring and forced to live with his parents, Joseph Bankman and Barbara Fried, both professors at Stanford Law School in California.

The prosecution’s case was bolstered by last month’s guilty pleas by two of Bankman-Fried’s closest aides.

Caroline Ellison, who was the chief executive officer of Alameda, and Gary Wang, former chief technology officer of FTX, pleaded guilty to seven and four felony charges, respectively, and agreed to cooperate with prosecutors.

Bankman-Fried, Ellison and Wang have also been subpoenaed by the US Securities and Exchange Commission and the Commodity Futures Trading Commission. Ellison and Wang settled those civil suits.

FTX’s new chief executive John Ray, known for his work on the bankruptcy of energy company Enron Corp, said FTX was run by “grossly inexperienced” and unsophisticated people.

(Reporting by Jack Queen and Luc Cohen in New YorkAdditional reporting by Jonathan Stempel in New YorkEditing by Noeleen Walder and Matthew Lewis)

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