Wednesday, January 4, 2023

Sam Bankman-Fried, the creator of FTX, enters a not-guilty plea

FTX founder Sam Bankman-Fried pleads not guilty to fraud

 In New York: A judge set a tentative trial date for October after FTX founder Sam Bankman-Fried pleaded not guilty in Manhattan federal court to charges that he cheated investors and looted customer deposits on his cryptocurrency trading platform.

At Alameda Research, his cryptocurrency hedge fund trading firm, Bankman-Fried, 30, denied charges that he had illegally diverted large sums of customer money from FTX for extravagant real estate purchases, political donations, and risky trades.

Mark Cohen, Bankman-Fried's attorney, made the following statement about his client's plea: He denies each and every charge."

Following that, Judge Lewis A. Kaplan decided on October 2 as the tentative date for the trial, stating that he might move it back or forward a day or two. The prosecutor estimated that the government would need to present its case to a jury for a month, while the defense attorney predicted that it would take two to three weeks.

Bankman-Fried entered the courthouse on a rainy day in a backpack and made his first appearance before Kaplan amid a swarm of cameras. Throughout the majority of the half-hour hearing, Bankman-Fried appeared relaxed in the courtroom, occasionally speaking with a lawyer next to him. He did not speak to reporters outside as he left court.

The judge and Bankman Fried's attorneys discussed a timetable for the trial after the defendant pleaded not guilty. In April, defense attorneys were given dates to present arguments disputing the validity of the charges and prosecutors were given dates to respond to those arguments. On May 18, oral arguments were scheduled.

By prohibiting Bankman-Fried from accessing or transferring cryptocurrency, assets of FTX or Alameda Research, or any assets purchased with funds from the companies, the judge also added to Bankman-Fried's bail conditions.

He did this because Assistant United States Attorney Danielle Sassoon said that Bankman-Fried had worked with foreign regulators to transfer FTX assets to them after FTX declared bankruptcy, and he knew that US bankruptcy authorities were also interested in those assets.

According to Sassoon, Bankman-Fried told a co-conspirator that he knew there was competition between foreign regulators and US bankruptcy authorities. He also said that he wanted to get the assets to the foreign regulators because he thought they would be more lenient with him and he might be able to regain control of his business.

Cohen, on the other hand, insisted that Bankman-Fried had not transferred any assets on his own and that anything that was moved was ordered by a court in the Bahamas.

Noting that FTX was the second largest cryptocurrency exchange, Sassoon also informed the judge that the government wanted to create a website for the fraud victims rather than contacting each one individually because there could be more than one million of them.

Before Bankman-Broiled's appearance, his legal counselors sent a letter to the adjudicator, saying Bankman-Seared's folks — both Stanford Graduate school teachers, lately have turned into the objective of "extraordinary media investigation, provocation, and dangers. They said the guardians had gotten "a constant flow of compromising correspondence, including interchanges communicating a longing that they experience actual damage."

Consequently, the attorneys requested that the names of two individuals lined up to sign Bankman-Fried's $250 million personal recognizance bond be removed from court records. Bankman-Fried was freed about two weeks ago with the condition that he wait for his trial at his parents' house in Palo Alto, California, under electronic monitoring.

The judge allowed the names to be kept secret for the time being, but he said he might change his mind if the media or others object.

Alameda's 28-year-old owner Carolyn Ellison and FTX's 29-year-old co-founder Gary Wang have pleaded guilty to fraud charges and are cooperating with prosecutors in an effort to obtain leniency. Both are free on bail.

Due to fears that Bankman-Fried might flee, their pleas were kept secret until he was in the air after being extradited from the Bahamas, where FTX is based.

US Attorney Damian Williams made the announcement shortly before Bankman-Fried's arraignment that he was establishing a task force of senior prosecutors in his office to investigate and prosecute matters connected to the FTX collapse. He said the team additionally will attempt to follow and recuperate casualty resources.

Williams stated in a press release, "The Southern District of New York is working around the clock to respond to the implosion of FTX." It is a time when everyone is on board. We are establishing the SDNY FTX Task Force to guarantee that this pressing work will continue with the assistance of all SDNY resources and knowledge until justice is served.

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