By Jack Queen and Luc Cohen
NEW YORK (RockedBuzz via Reuters) – Sam Bankman-Fried pleaded not guilty on Tuesday to criminal charges of deceiving investors at his now-bankrupt cryptocurrency exchange FTX and causing billions of dollars in losses, in what the public ministries have called a fraud “epic”.
He filed his plea in federal court in Manhattan, where he faces eight felony counts, including wire fraud and conspiracy to commit money laundering. The 30-year-old former tycoon is accused of looting FTX client deposits to support his hedge fund Alameda Research, buy real estate and donate millions of dollars to political causes.
“Clients’ funds have also been used and laundered through political donations, charitable donations and a variety of venture investments,” federal prosecutor Danielle Sassoon said at the hearing.
Sassoon suggested the government has a deep well of evidence against Bankman-Fried, saying prosecutors will turn over hundreds of thousands of documents to the defense over the next few weeks.
U.S. District Judge Lewis Kaplan on Tuesday set an Oct. 2 date for the trial, which Sassoon said could last four weeks.
The government has already obtained guilty pleas from two former high-level associates of Bankman-Fried – former Alameda chief executive Caroline Ellison and former FTX chief technology officer Gary Wang – who are cooperating with prosecutors and they could testify at trial.
A clean-shaven Bankman-Fried wore a blue suit, white shirt, and blue polka-dot tie and carried a backpack to court — a far cry from the shorts and T-shirts that were his attire of choice when he ran FTX out of 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 indictment. When he finished, he approached the handful of courtroom draftsmen and commented on their work.
Massachusetts Institute of Technology graduate faces up to 115 years in prison if convicted. He has previously acknowledged making mistakes at FTX, but said he doesn’t believe he has criminal liability.
Bankman-Fried rode a boom in the value of bitcoin and other digital assets to create a net worth of approximately $26 billion and become an influential political donor in the United States.
FTX collapsed in early November after a spate of withdrawals and filed for bankruptcy on November 11, wiping out the Bankman-Fried 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 under electronic monitoring and has had 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 cannot access FTX or Alameda assets.
This came after Sassoon accused Bankman-Fried of trying to transfer assets to an unnamed foreign country which he thought would be “more lenient”. He said prosecutors were also investigating reports late last month that funds were transferred from Alameda cryptocurrency wallets, though he said there was no evidence Bankman-Fried executed those transactions.
Mark Cohen, Bankman-Fried’s attorney, said his client “didn’t make” the Alameda transfers. Referring to allegations that Bankman-Fried tried to move money overseas, he said his client had sought to comply with an order from the Bahamian court that temporarily seized some FTX assets last month.
The Securities Commission of the Bahamas (SCB) – the Caribbean nation’s financial regulator – did not immediately respond to a request for comment.
The SCB in November ordered Bankman-Fried and Wang to transfer assets under their control, the commission’s executive director, Christina Rolle, said in a Dec. 29 affidavit filed in the Bahamas Supreme Court. The Bahamas has appointed liquidators to liquidate FTX’s international trading business.
Kaplan also granted Bankman-Fried’s request on Tuesday not to disclose the names of two other co-signatories to the bond.
Bankman-Fried’s lawyers said his parents, who co-signed the bond, have received physical threats since the collapse of FTX and that other co-signers may face similar harassment.
(Reporting by Jack Queen and Luc Cohen in New YorkAdditional reporting by Jonathan Stempel in New YorkEditing by Noeleen Walder and Matthew Lewis)