Bankman-Fried pleads not guilty in FTX fraud case

Case likely to be one of highest profile white-collar trials in years

FTX founder Sam Bankman-Fried pleaded not guilty to criminal charges on Tuesday and is set to face trial in October, which is expected to be one of the most high-profile white-collar fraud trials in recent years.

Bankman-Fried appeared in US district court in New York on Tuesday. US district judge Lewis Kaplan set a trial date for October 2nd, after US prosecutors said they expected to produce all evidence for the case in the next four weeks.

While the plea was not unexpected, it buys the 30-year-old more time, legal experts say. Mr Bankman-Fried will get a better idea on the evidence prosecutors have against him and plan his next move. The plea puts the case on track for a lengthy trial, which could last at least four weeks.

In December, US prosecutors in Manhattan revealed eight criminal counts against him, including wire fraud and campaign finance violations.


Assistant US attorney Danielle Sassoon summarised the evidence against Mr Bankman-Fried, noting that from the beginning FTX had a unique relationship with Alameda that allowed it to receive preferential treatment.

Manhattan US attorney Damian Williams, who is leading the Bankman-Fried case, announced on Tuesday the formation of a taskforce of senior prosecutors to handle the investigation and prosecuting matters related to the collapse, made up of members of units probing securities and commodities fraud, public corruption, money laundering and transnational criminal enterprises. The taskforce will use the office’s asset forfeiture and cyber capabilities to “trace and recover victim assets”.

The group will be led by the office’s chief counsel, Andrea Griswold, who serves as a co-chief of the Securities and Commodities Fraud Task Force, and will be supervised by the heads of the securities and commodities fraud unit with consultation by the heads of the public corruption and money laundering and transnational criminal enterprise units.

US attorney Damian Williams previously revealed the government had spoken to dozens of FTX employees and had tens of thousands of pages of material, including emails, financial statements and Signal messages.

The government’s star witnesses are some of Mr Bankman-Fried’s closest associates – former Alameda Research chief executive Caroline Ellison and FTX chief technology officer Gary Wang. They have pleaded guilty to fraud charges in co-operation agreements carved out with the government while Mr Bankman-Fried was still in the Bahamas.

Only a fraction of criminal cases in the US end up going to trial. The FTX founder was arrested in the Bahamas on December 12th after US prosecutors filed an indictment accusing him of spearheading a years-long fraud through the cryptocurrency exchange.

Mr Bankman-Fried fraudulently raised $1.8 billion (€1.7 billion) from investors under the guise of FTX having appropriate controls and risk management measures, authorities allege. FTX’s catastrophic collapse in November, and subsequent bankruptcy filing, shattered trust in the cryptocurrency industry.

He also is accused of misusing customers’ funds at FTX to cover personal expenses, real estate purchases and trading at Alameda Research, the hedge fund he established in 2017. In media interviews before his arrest, Mr Bankman-Fried conceded being a poor manager with lapses in oversight but denied knowingly committing fraud.

He was extradited to the US last month and released from custody on a $250 million bail package. He is also facing civil action from the Securities and Exchange Commission and Commodity Futures Trading Commission. Those cases will likely be paused while the criminal case plays out. — Bloomberg