Sam Bankman-Fried Not Guilty in FTX Fraud Case; October Inquiry Collection

NEW YORK, Jan 3 (Reuters) – Sam Bankman-Fried pleaded guilty on Tuesday to criminal charges that he defrauded investors at the now-bankrupt FTX cryptocurrency exchange out of billions of dollars in what prosecutors called an “epic” fraud.

He entered his plea in Manhattan federal court, where he faces eight felony counts, including wire fraud and money laundering conspiracy. The 30-year-old former mogul is accused of looting FTX clients’ deposits to support his Alameda Research hedge fund, buying real estate and donating millions of dollars to political causes.

“Client funds were used and defrauded through political donations, charitable donations and various venture investments,” federal prosecutor Daniel Sassoon said at the hearing.

Sassoon suggested the government had a deep case of evidence against Bankman-Fried, saying prosecutors would turn over hundreds of thousands of documents to the defense in the coming weeks.

U.S. District Judge Louis Kaplan on Tuesday set an Oct. 2 date for the trial, which Sassoon said is expected to last four weeks.

Two former top associates of Bankman-Fried — former Alameda chief executive Carolyn Ellison and former FTX chief technology officer Gary Wang — are cooperating with prosecutors and may testify at trial.

A clean-shaven Bankman-Fried, dressed in a blue suit, white shirt and polka-dot blue tie, carried a backpack into court — a far cry from the shorts and T-shirts that were his preferred attire when he drove the FTX from the Bahamas.

Bankman-Fried did not speak to the judge during the hearing, but conferred privately with her attorneys. He shook hands with a lawyer before the hearing. When that was done, he approached the courtroom painters and commented on their work.

Massachusetts Institute of Technology may face up to graduation 115 years Jail if found guilty. He previously admitted wrongdoing at FTX but said he did not believe he was criminally responsible.

‘too soft’

Bankman-Fried has become the most influential political donor in the United States, building a net worth of $26 billion thanks to the boom in the value of bitcoin and other digital assets.

FTX collapsed after a wave of deflation in early November and declared bankruptcy on November 11, wiping out Bankmann-Fried’s fortune. He later said he had $100,000 in his bank account.

He was deported last month from the Bahamas, where he had been living and based on the exchange.

Since her release on $250 million bond on December 22, Bankman-Fried has been subject to electronic monitoring and has had to live with professors Joseph Bankman and Barbara Fried at Stanford Law School in California. Fried attended her son’s arraignment Tuesday.

On Tuesday, Kaplan imposed a new bail condition, saying Bankman-Fried cannot access FTX or the Alameda properties.

Bankman-Fried thought it would be “too lenient” after Sassoon accused him of trying to transfer assets to an unnamed foreign country. He said prosecutors were investigating late last month that funds were transferred out of Alameda cryptocurrency wallets, but there was no evidence that Bankman-Fried made those transactions.

Bankman-Fried’s lawyer, Mark Cohen, said his client “didn’t do” the Alameda transfers. Referring to allegations that Bankman-Fried tried to transfer money overseas, he said his client was trying to comply with a court order in the Bahamas 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.

SCB in November ordered the transfer of assets under the control of Bankman-Fried and Wang, the commission’s executive director, Christina Rolle, said in an affidavit filed Dec. 29 in the Bahamas Supreme Court. The Bahamas has appointed liquidators to wind up FTX’s international trading business.

Kaplan on Tuesday granted Bankman-Fried’s request not to release the names of two additional co-signers for the bond.

Lawyers for Bankman-Fried said her parents, who co-signed the bond, have received physical threats since FTX’s collapse, and that other co-signers may face similar harassment.

Reporting by Jack Quinn and Luke Cohen in New York Additional reporting by Jonathan Stempel in New York Editing by Nolene Walter and Matthew Lewis

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