FTX founder Sam Bankman-Fried has pleaded not guilty

New York
CNN
—

Sam Bankman-Fried, the founder of bankrupt crypto exchange FTX, has pleaded not guilty to criminal charges, setting up a high-stakes legal battle against two people closest to him. Former business partners.

The 30-year-old businessman, who is out on $250 million bond, appeared in federal court in Manhattan on Tuesday., Lawyers and his mother, Barbara Fried, sat behind him. Attorney Mark Cohen entered a plea of ​​not guilty on all counts.

The judge fixed the hearing for October 2.

Bankman-Fried, once hailed as the public face of the crypto industry, Accused Two counts of wire fraud and six counts of conspiracy last month for his role in what a federal prosecutor called “fraud of epic proportions.”

Authorities have accused Bankman-Fried of stealing client funds from FTX to cover loans taken out by FTX’s affiliated crypto hedge fund, Alameda Research. They say he used the funds to invest in other companies and donate to the campaigns of politicians from both parties to influence public policy.

In public statements following FTX’s bankruptcy filing in November, Bankman-Fried He insisted that he had committed no fraud and customer funds were not known to have been misused.

Two senior executives from Bankman-Fried’s crypto businesses — Gary Wang, co-founder of FTX, and Carolyn Ellison, who served as CEO of Alameda – have to He confessed to the crime Many face criminal charges and cooperate with federal prosecutors.

Ellison apologized when he filed his plea last month, saying he “agreed with Mr. Bankman-Fried and others not to publicly disclose the true nature of the relationship between Alameda and FTX, including Alameda’s loan arrangement.”

More than 1 million people may have been affected by FTX’s collapse, attorney Daniel Sassoon told the court on Tuesday. Prosecutors plan to file a motion requesting that all victims be notified through a website, rather than individually, Sassoon said.

As part of her release, Bankman-Fried is under house arrest at her parents’ home in Palo Alto, California. He put on the tracking device and handed over the passport.

He can meet up to 115 years Jail if found guilty on all charges.

Last month, a US judge released him He made his first appearance on American soil in a $250 million bond Arrest In the Bahamas, There he lived and conducted his business.

Bankman-Fried’s parents, both law professors at Stanford who co-signed her bond, “have been the target of intense media scrutiny, harassment and threats,” defense attorneys wrote in a letter to the court. The other two co-signers are called “sureties”.

“There is serious reason to worry that the two additional sureties will face similar intrusions into their privacy, as well as threats and harassment if their names are not redacted on their bonds or their identities are made public,” the letter said.

Judge, Louis A. Kaplan ruled that those names and addresses could be redacted for now, but said the ruling could be reconsidered if the media or other interested parties file motions to make the information public.

Prosecutors allege that Bankman-Fried committed “one of the largest financial frauds in American history,” siphoning billions of dollars from FTX clients to cover losses at its sister hedge fund, Alameda Research.

Both FTX and Alameda filed for bankruptcy in December as investors rushed to pull their deposits from the exchange, triggering a liquidity crisis. And Infectious Across the crypto industry.

FTX’s new CEO, John Ray III, who made his name overseeing Enron’s liquidation in the early 2000s, told a congressional hearing that customer funds deposited at the FTX site were commingled with funds at Alameda, sparking speculation. – Risk Challenge.

Ray described the situation at the two companies as “an old-fashioned scam” at the hands of a small group of “grossly inexperienced and unsophisticated individuals”.

Separately on Tuesday, US regulators issued a statement warning market participants of specific risks posed by the cryptocurrency market due to fraud, volatility, misrepresentation and poor risk management.

Risks related to the crypto-asset sector cannot be mitigated or controlled, and it is important not to migrate to the banking system,” read a joint statement by the Federal Reserve, the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency.

— CNN’s Alison Morrow, Nikki Brown and Samantha Murphy Kelly contributed to this report.