FTX Founder Sam Bankman-Fried Pleads Not Guilty in Crypto Case

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NEW YORK FTX founder and fallen cryptocurrency guru Sam Bankman-Fried pleaded not guilty through his attorney at his arraignment on Tuesday for embezzling billions of dollars, defrauding clients and investors in companies he controlled while covering up his illegal management of funds. A trial date was also scheduled for later this year.

It was the second Manhattan court appearance for Bankman-Fried, 30, who was extradited from the Bahamas last month and is facing a $250 million house arrest order. dollars for nearly two weeks. Bankman-Fried wears an ankle monitor and must stay at her parents’ home in Palo Alto, Calif., except for court appearances and exercise sessions.

He arrived at the courthouse more than an hour before his case was called, surrounded by a group of photographers as he got out of a black SUV.

During the proceedings, U.S. District Court Judge Lewis A. Kaplan, who is currently overseeing the case, granted anonymity to two parties who are expected to join Bankman-Frieds’ parents in endorsing her engagement. Bankman-Fried had previously been ordered to have two other guarantors for his bail by Jan. 5, including at least one unrelated.

What to know about Sam Bankman-Fried and the collapse of crypto exchange FTX

Typically, bond sureties are identified in court and their names are in the public domain. On Tuesday morning, Bankman-Frieds’ attorneys submitted a letter to Kaplan requesting the anonymity of the two remaining guarantors, citing security concerns and noting that Bankman-Frieds’ parents, who are both professors at Stanford Law School, received alarming communications.

In recent weeks, Mr Bankman-Frieds’ parents have become the target of intense media scrutiny, harassment and threats, the letter says. Among other things, Mr. Bankman-Frieds’ parents received a steady stream of threatening correspondence, including communications expressing a desire that they suffer physical harm.

Prosecutors did not object to the defense attorneys’ request, but Kaplan said he would reconsider the decision to anonymize if third parties such as the media file a request.

Entering a plea is required at the start of a case. The 30-year-old could change his plea as the case progresses, either on his own or as part of a negotiated deal with prosecutors.

Kaplan scheduled the Bankman-Frieds trial for Oct. 2, but noted that the start date could change minimally before then.

Two of Bankman-Frieds’ close aides have already made deals with the US attorneys’ office in Manhattan. In addition to pleading guilty to charges similar to those against Bankman-Fried, former Alameda Research CEO Caroline Ellison and former FTX CTO Gary Wang have agreed to cooperate with the department. of Justice.

Ellison and Wang may be key in helping prosecutors unpack what they described as an illicit mix of finances by crypto trading platform FTX and Alameda, which was hedge fund Bankman-Frieds. During Tuesday’s arraignment, Assistant U.S. Attorney Danielle Sassoon described a unique and hidden relationship between FTX and Alameda.

Two Bankman-Fried colleagues plead guilty to fraud

From the outset, customer deposits were deposited into bank accounts controlled by Alameda, and from the earliest days of the exchange, Alameda used customer money for Alameda’s operational expenses, Sassoon added.

Prosecutors say the alleged scheme cost FTX customers billions of dollars as the company collapsed. There were so many alleged victims involved at least 1 million that the US Attorney’s Office is seeking permission to send the required victim notifications via a website, instead of individually as is usually done.

Kaplan also granted a request by Sassoon to bar Bankman-Fried from accessing or transferring FTX and Alameda assets following Dec. 28, noting that certain Alameda wallets had been accessed and that money had been transferred. Bankman-Fried has denied any involvement in those transactions, and Sassoon said the US government is still investigating what happened.

Prosecutors said Bankman-Fried’s personal wealth took a huge hit when his empire crumbled around him. FTX was the third-largest crypto exchange in the world, and its brand benefited from ads featuring powerhouse celebrities, including athletes such as Tom Brady and Stephen Curry.

The collapse of FTX in early November marked a major shift in the cryptocurrency landscape, shaking customer and investor confidence in other major exchanges. Bankman-Fried, who is charged with wire fraud, conspiracy and related charges, faces a significant prison sentence if convicted in what prosecutors have called a very strong case. He faces up to 115 years in prison.

Bankman-Fried did several interviews in the weeks before his arrest, saying he was unaware the funds had been embezzled. He was arrested in the Bahamas, where he lived and reportedly partied with other FTX and Alameda executives, the day before he testified before Congress about the collapse of his crypto exchange.

Washington Post reporters Tory Newmyer, Julian Mark and Peter Whoriskey explain what led to the stunning collapse of cryptocurrency exchange FTX. (Video: Joy Yi/The Washington Post, Photo: Stefani Reynolds/Bloomberg/The Washington Post)

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