(Reuters) – Sam Bankman-Fried pleaded not guilty on Tuesday to federal accusations that he defrauded investors in his now-defunct FTX cryptocurrency exchange and caused billions of dollars in losses in an “epic” scheme, according to prosecutors.
He entered his plea in federal court in Manhattan, where he faces eight criminal charges, including wire fraud and money laundering conspiracy. The 30-year-old ex-mogul is accused of stealing FTX clients' deposits and using them to finance his Alameda Research hedge fund, purchase real estate, and contribute millions of dollars to political organizations.
“Customer monies were also utilized and laundered via political contributions, charity gifts, and a variety of venture investments,” federal prosecutor Danielle Sassoon said during the hearing.
Sassoon stated that the government had a wealth of evidence against Bankman-Fried, claiming that prosecutors would give over hundreds of thousands of papers to the defense in the coming weeks.
On Tuesday, U.S. District Judge Lewis Kaplan set an Oct. 2 trial date, which Sassoon predicted may take four weeks.
The government has already obtained guilty pleas from two of Bankman-former Fried's senior collaborators, former Alameda CEO Caroline Ellison and former FTX Chief Technology Officer Gary Wang, who are collaborating with prosecutors and may testify at trial.
A clean-shaven Bankman-Fried entered the courtroom wearing a blue suit, white shirt, and dotted blue tie while carrying a backpack, a far cry from the shorts and t-shirts he wore while he managed FTX from the Bahamas.
During the hearing, Bankman-Fried did not speak to the court but instead spoke privately with his counsel. Before the arraignment, he shook hands with one of the prosecutors. When it was over, he approached the courtroom sketch artists and complimented their work.
If convicted, the Massachusetts Institute of Technology graduate could face up to 115 years in jail. He has already admitted to making errors at FTX but has said that he does not feel he is criminally liable.
Bankman-Fried leveraged the rise in the value of bitcoin and other digital assets to amass an estimated $26 billion net worth and become a powerful political contributor in the United States.
After a surge of withdrawals, FTX failed in early November and filed bankruptcy on November 11, wiping off Bankman-riches. Fried Later, claimed to have $100,000 in his bank account.
He was extradited from the Bahamas, where he resided and where the trade took place, last month.
Bankman-Fried has been subject to electronic monitoring and compelled to reside with his parents, Joseph Bankman and Barbara Fried, both professors at Stanford Law School in California, since his release on a $250 million bail on December 22. Fried was present for her son's hearing on Tuesday.
Kaplan issued a new bail condition on Tuesday, stating that Bankman-Fried cannot access FTX or Alameda assets.
Sassoon had accused Bankman-Fried of attempting to move funds to an unknown foreign nation that he believed would be “more lenient.” Prosecutors were also looking into claims late last month that monies were moved out of Alameda cryptocurrency accounts, she said, adding that there was no proof Bankman-Fried carried made such transactions.
Bankman-attorney, Fried's Mark Cohen, said that his client “did not make” the Alameda transactions. In response to the charge that Bankman-Fried attempted to move money offshore, he said that his client was attempting to comply with a court order issued in the Bahamas last month, which temporarily froze certain FTX assets.
The Bahamas' financial regulator, the Securities Commission of the Bahamas (SCB), did not respond quickly to a request for comment.
The SCB asked Bankman-Fried and Wang to transfer assets under their control in November, according to Christina Rolle, the commission's executive director, in a Dec. 29 affidavit submitted to the Bahamas Supreme Court. The government of the Bahamas has hired liquidators to wind down FTX's foreign trading operations.
On Tuesday, Kaplan approved Bankman-request Fried that the identities of two other co-signers for the bond not be made public.
Bankman-lawyers Fried claims that his parents, who co-signed the bond, have received violent threats since FTX's demise, and that other co-signers may suffer similar harassment.
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