FTX founder Sam Bankman-Fried pleads not guilty

New York
CNN
 — 

Sam Bankman-Fried, the founder of bankrupt crypto exchange FTX, pleaded not guilty to legal expenses, placing up a large-stakes lawful struggle that pits him from two of his closest former organization companions.

The 30-calendar year-old entrepreneur, who is out on a $250 million bail offer, was arraigned in federal court in Manhattan on Tuesday. His lawyer Mark Cohen entered the plea of not guilty to all counts.

The choose established a trial date for Oct 2.

Bankman-Fried, at the time hailed as the public facial area of the crypto sector, was indicted on two counts of wire fraud and 6 counts of conspiracy-associated prices final thirty day period for his role in what just one federal prosecutor termed “a fraud of epic proportions.”

Authorities have accused Bankman-Fried of stealing client resources from FTX to go over loans taken out by Alameda Analysis, FTX’s affiliated crypto hedge fund. They also say he made use of all those funds to make investments in other firms and donate to strategies of politicians from equally parties to influence public policy.

In community statements pursuing FTX’s personal bankruptcy filing in November, Bankman-Fried has insisted that he did not dedicate fraud and was unaware that customer funds were remaining applied improperly.

Two senior executives from Bankman-Fried’s crypto corporations — Gary Wang, the co-founder of FTX, and Caroline Ellison, who served as Alameda’s CEO — have pleaded responsible to multiple legal charges and are cooperating with federal prosecutors.

Ellison apologized when entering her plea very last month, telling the court docket that she “agreed with Mr. Bankman-Fried and other individuals to not publicly disclose the genuine nature of the connection amongst Alameda and FTX, such as Alameda’s credit rating arrangement.”

As aspect of his launch, Bankman-Fried is underneath dwelling arrest at his parents’ house in Palot Alto, California. He is carrying a checking machine and has surrendered his passport.

He could confront up to 115 years in prison if convicted on all expenses.

Previous thirty day period, a US judge produced him on a $250 million bond in his 1st physical appearance on American soil since his arrest in the Bahamas, where by he lived and ran his companies.

Bankman-Fried’s mothers and fathers, both law professors at Stanford who co-signed his bond, have “become the concentrate on of intense media scrutiny, harassment, and threats,” defense legal professionals wrote in a letter to the court, even though inquiring to redact the names of two other co-signers, recognized as “sureties.”

“There is really serious bring about for issue that the two supplemental sureties would face identical intrusions on their privacy as perfectly as threats and harassment if their names surface unredacted on their bonds or their identities are or else publicly disclosed,” the letter states.

Prosecutors allege that Bankman-Fried orchestrated “one of the greatest money frauds in American history,” thieving billions of pounds from FTX shoppers to address losses at its sister hedge fund, Alameda Research.

FTX and Alameda both of those submitted for personal bankruptcy in December following investors rushed to pull their deposits from the exchange, sparking a liquidity disaster and triggering contagion throughout the crypto sector.

FTX’s new CEO, John Ray III, who created his name overseeing the liquidation of Enron in the early 2000s, stated in a congressional hearing that consumer resources deposited on the FTX web site have been commingled with resources at Alameda, which built a selection of speculative, significant-possibility bets.

Ray explained the situation at the two businesses as “old-fashioned embezzlement” at the fingers of a modest team of “grossly inexperienced and unsophisticated men and women.”

Separately on Tuesday, US regulators issued a assertion warning current market members about the individual pitfalls posed by the cryptocurrency marketplace for the reason that of the prevalence of fraud, volatility, misrepresentation and faulty threat management.

“It is crucial that hazards associated to the crypto-asset sector that simply cannot be mitigated or managed do not migrate to the banking process,” go through the statement, issued jointly by the Federal Reserve, the Federal Deposit Insurance coverage Corporation, and the Business office of the Comptroller of the Currency.

— CNN’s Allison Morrow and Samantha Murphy Kelly contributed to this report.

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