NY. FTX founder Sam Bankman-Fried pleaded not guilty Tuesday to multimillion-dollar fraud charges against him in federal court in Manhattan.
The 30-year-old pleaded not guilty to two counts of fraud and six counts of conspiracy, including conspiring to launder money from his cryptocurrency trading platform to his hedge fund and violating campaign finance laws. In a well-attended hearing, federal judge Lewis Kaplan set the trial date for October 2.
Dressed in a navy suit, patterned tie and brown leather shoes, Bankman-Fried nervously bit the corners of his mouth during the 30-minute proceedings. He faces more than a century in prison if convicted of embezzling large sums of money from clients, investors and creditors of his Alameda FTX trading company.
Manhattan Assistant District Attorney Danielle Sassoon said the disgraced businessman took careful steps to secure preferential treatment for Alameda, including the use of FTX code, software and products.
In June, Sassoon said Bankman-Fried borrowed billions from FTX, the world's second-largest cryptocurrency trading platform, to pay off loans Alameda couldn't repay. According to her, the funds were also laundered through political and charitable donations.
The walls came down in November when Alameda's balance sheets were revealed and the head of the world's largest cryptocurrency exchange Binance tweeted about FTX, Sassoon said. This caused a spike in customer withdrawals, exposing an $8 billion hole in their accounts.
FTX, which had more than $30 billion at its peak, filed for Chapter 11 bankruptcy on Nov. 11.
Sassoon estimates that more than a million victims have been defrauded because of the "unique and hidden" relationship between FTX and Alameda.
Bankman-Freed has been released on $250 million bail, the largest package of its kind, since his initial appearance on Dec. 22 following his extradition from the Bahamas, where FTX is based.
It came to life in court when Sassoon successfully petitioned Kaplan to bar him from FTX or Alameda assets, angrily scribbling messages to his lawyers on a notepad and pointing at them with a pen. Prosecutors made the request after Alameda's funds were frozen in late December, making them unavailable for state recovery.
Bankman-Fried's attorney, Mark Cohen, denied that his client tampered with the accounts, echoing a Bankman-Fried post last Friday. But Sassoon said prosecutors didn't take him at his word.
"We are not giving him our full attention just because our investigation has revealed that he has previously ... made false claims," Sassoon said.
Kaplan also agreed to a request from Bankman-Fried to keep secret the names and addresses of the two underwriters in the giant bonus package. The agreement was also signed by his parents, law professors at Stanford University.
Bankman-Fried's top aides, including his former girlfriend, pleaded guilty to federal crimes on Dec. 21 and agreed to cooperate against him.
Caroline Ellison, 28, a former Fried Flame banker, was Alameda's CEO. Another successful manager, 29-year-old Gary Wang, co-founded FTX. Both admitted to bank fraud, securities fraud and commodity fraud.
Earlier Tuesday, the Feds announced the creation of a new division dedicated solely to uncovering wrongdoing in the Bankman-Freed crypto empire.
Manhattan District Attorney Damian Williams said his office was working around the clock to respond to the FTX collapse and that it was "time for everyone to get going."
"We are launching an FTX (Southern District of New York) task force to ensure that this urgent work, fueled by the full resources and expertise of SDNY, continues until justice is served," Williams said.
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