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Sam Bankman-Fried pleads not guilty to fraud charges in New York

Former FTX CEO Sam Bankman-Fried (C) arrives to enter a plea before US District Judge Lewis Kaplan in Manhattan federal court, New York, on January 3, 2023.

Ed Jones | AFP | Getty Images

Sam Bankman-Fried pleaded not guilty in New York federal court on Tuesday to eight charges related to the collapse of his former crypto exchange FTX and the hedge fund Alameda Research.

The former crypto billionaire was indicted on conspiracy to commit wire and securities fraud, individual counts of securities fraud and wire fraud, money laundering and conspiracy to evade campaign finance regulations.

Bankman-Fried arrived outside the courthouse in a black SUV and was swarmed by cameras from the moment his car arrived. The scrum grew so thick that Bankman-Fried’s mother was unable to exit the vehicle, falling to the wet pavement as cameras panned out to catch a glimpse of her son.

Bankman-Fried was dragged by security through the crowd and into the courthouse within moments, with photographers scrambling to get out of the way.

Earlier in the day, Bankman-Fried’s lawyers filed a motion to seal the names of two people who had guaranteed Bankman-Fried’s good behavior with a bond. They argued that the visibility of the case and the defendant had already posed a risk to Bankman-Fried’s parents, and that the sureties should not be subject to the same scrutiny. Judge Lewis Kaplan approved the motion in court.

Bankman-Fried returned to the United States from the Bahamas on December 21, and the next day he was released on a $250 million recognizance bond, secured by his family’s home in California.

Federal prosecutors also announced the launch of a new task force to recover victim assets as part of an ongoing investigation into Bankman-Fried and the collapse of FTX.

“The Southern District of New York is working around the clock to respond to the implosion of FTX,” United States Attorney Damian Williams said in a statement Tuesday.

The US Attorney’s Office for SDNY had alleged that Bankman-Fried used $8 billion worth of client assets for extravagant real estate purchases and vanity projects, including stadium naming rights and millions in political donations.

Federal prosecutors built their case against Bankman-Fried with unusual speed, wrapping up criminal charges against the 30-year-old within weeks. The federal charges came along with complaints from the Commodity Futures Trading Commission and the Securities and Exchange Commission.

They were assisted by two of Bankman-Fried’s closest allies, Caroline Ellison, the former CEO of his hedge fund Alameda Research, and Gary Wang, who co-founded FTX with Bankman-Fried.

Ellison, 28, and Wang, 29, pleaded guilty on December 21. Their plea deals with prosecutors came after rampant speculation that Ellison, Bankman-Fried’s former romantic partner, was cooperating with federal probes.

Another former FTX executive, Ryan Salame, apparently first alerted regulators to alleged wrongdoing at FTX. Salame, a former co-CEO of FTX, flagged “possible mishandling of client assets” to Bahamian regulators two days before the crypto exchange filed for bankruptcy protection, according to a filing with the Securities Commission of the Bahamas.

Bankman-Fried was accused by federal law enforcement and financial regulators of committing what the SEC called one of the largest and most “brazen” frauds in recent memory. His stunning fall was precipitated by reporting that raised questions about the nature of the hedge fund’s balance sheet.

In the weeks since FTX filed for bankruptcy in Delaware on November 11, the extent of corporate abuse has been revealed. Compensation chief John J. Ray said it was a “complete failure of corporate control.”

Bankman-Fried was indicted in New York federal court on December 9, and was arrested by Bahamian law enforcement at the request of US prosecutors on December 12. or their client would not consent to extradition.

This is a development story. Check back for updates.

SEE: Sam Bankman-Fried comes to court

Sam Bankman-Fried pleads not guilty to fraud charges in New York

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