Sam Bankman-Fried will likely plead not guilty to the fraud charges

FTX founder Sam Bankman-Fried will likely plead not guilty to fraud and other charges during his trial next week, according to people familiar with the matter.

The US Attorney’s Office for the Southern District of New York earlier this month indicted Mr Bankman-Fried With engaging in criminal behaviour that contributed to the collapse of the cryptocurrency exchange, claiming to have oversaw one of the largest financial frauds in American history. One person said Mr. Bankman-Fried is likely to appear in person in New York to present his petition on January 3rd.

Before he was arrested, Mr. Bankman Fried blamed me Loss of customer money on the sloppy record-keeping and bank account issue that allowed Alameda Research, a trading subsidiary, to cover large losses with funds earmarked for FTX. His plea of ​​not guilty was widely expected.

The collapse of FTX triggered the largest cryptocurrency-related bankruptcy ever, and court filings have already shed light on what went wrong and how complicated things could get. Here are three things to know about the company bankruptcy process. Photo: Lamik/Bloomberg News

Mr. Bankman-Fried is at odds with his partners – Caroline Ellison, former CEO of Alameda Research, and Gary Wang, former CTO of FTX – who They both pleaded guilty For offenses similar to those of which Mr. Bankman Fred was accused. Both are cooperating with federal investigators.

The collapse of FTX and its sister trading company, Alameda, sent a jolt to the emerging world of cryptocurrency. Prosecutors allege that Mr. Bankman Fried took billions of dollars from clients’ money to pay the expenses and debts of his trading company, Alameda Research. Both companies Filed bankruptcy Last month. Individual traders who entrust their cryptocurrencies to FTX are likely to face lengthy bankruptcy proceedings before they have a chance to get their money back.

It was Mr. Bankman Fried It was issued on a $250 million bond Last week, he was ordered to stay at his parents’ home in Palo Alto, California, after he appeared in federal court in New York following his extradition from the Bahamas.

Prosecutors say that from 2019 through November, Mr. Bankman Fried conspired with unidentified individuals to defraud customers and lenders. He provided false and misleading information to lenders about Alameda’s financial condition, according to the indictment from the US Attorney’s office.

Mr. Bankman-Fried is also accused of defrauding the Federal Election Commission effective in 2020 by conspiring with others to make illegal contributions to candidates and political committees in other people’s names.

The Wall Street Journal previously reported that he and his associates have contributed more than $70 million to campaigns in recent years. personally made $40 million in donations Before the 2022 midterm elections.

Mr. Bankman-Fried also faces allegations from the Securities and Exchange Commission and the CFTC.

The SEC alleged in a civil suit that Mr. Bankman is unique Transferring customer funds from the beginning of FTX To support Alameda, make project investments, buy real estate, and make political donations. the The CFTC filed a lawsuit linked his alleged fraudulent behavior at Alameda and FTX to CFTC-regulated markets.

on Friday afternoon, Mr. Bankman Fred is back He took to Twitter for the first time since Dec. 12 to defend himself against rumors that he was moving funds from several crypto-wallet addresses linked to Alameda.

Cryptocurrency prices have tumbled this year amid surging central bank rates and the collapse of hedge funds and cryptocurrency lenders, with bitcoin and ether down 64% and 67% respectively, according to CoinDesk data. The total market capitalization of all digital tokens has fallen to $795 billion, compared to $2.2 trillion at the start of the year, per CoinMarketCap data.

Write to Caitlin Ostroff at [email protected] and Vicky Ge Huang at [email protected]

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