Sam Bankman-Fried, the founder and former CEO of collapsed exchange FTX, has entered a not guilty plea to eight charges of fraud in New York federal court on Tuesday, CNBC reports.
His plea comes weeks after two of his associates pleaded guilty to federal charges in the Southern District of New York. The trio are facing charges of conspiracy to commit wire fraud and securities fraud, individual charges of securities fraud and wire fraud, and conspiracy to commit money laundering.
Following his indictment by federal court in New York on Dec. 9, Bankman-Fried was arrested by Bahamas law enforcement at the request of U.S. prosecutors on Dec. 12. He was extradited to the U.S. at his own volition after what earlier looked like an attempt by his attorneys to keep him in the Bahamas.
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The report said attorneys for Bankman-Fried filed a motion to have the names of two individuals who had guaranteed Bankman-Fried release on bail with a bond concealed. The motion, which was approved by Judge Lewis Kaplan, is based on the claim that the visibility of the case and the defendant had already posed a risk to Bankman-Fried’s parents, and that the guarantors should not be subject to the same scrutiny.
Bankman-Fried’s parents are reportedly facing a threat.
Both the SEC and the Commodity Futures Trading Commission have filed charges against the three people involved.
Bankman-Fried is also up against federal charges and complaints from the Commodity Futures Trading Commission and the Securities and Exchange Commission. The former CEO is facing years in prison if he’s found guilty.
Although Bankman-Fried had maintained that he did not nothing wrong, blaming the collapse of the FTX on oversight and ignorance, the guilty plea by his closest allies, Caroline Ellison, former CEO of his hedge fund Alameda Research, and Gary Wang, who he co-founded FTX with, has splashed a major dent on his case.
Ellison, 28, and Wang, 29, pleaded guilty on Dec. 21, and are cooperating with prosecutors. Their cooperation is expected to give prosecutors an edge in the trial scheduled for Oct. 2 by Kaplan.
But another tussle is taking place alongside the legal proceedings against Bankman-Fried and his former associates. The CNBC reported on an ongoing fight between FTX and Bahamian authorities:
Federal prosecutor Danielle Sassoon told the court that Bankman-Fried had worked with foreign regulators to transfer assets that FTX’s U.S. management had been attempting to recover through the Chapter 11 bankruptcy process.
Regulators in the Bahamas and FTX’s U.S. lawyers have been fighting for weeks in Delaware bankruptcy court over hundreds of millions, if not billions, of dollars worth of cryptocurrency. FTX’s attorneys insist that Bahamian regulators have illicitly transferred hundreds of millions of dollars, and that Bankman-Fried assisted them.
Bahamian regulators say that local laws give them jurisdiction over those assets, and dispute the validity of the U.S. Chapter 11 proceedings.
Federal prosecutors appear to agree with FTX’s U.S. attorneys. Sassoon asked Kaplan to impose a new restriction barring Bankman-Fried from transferring or accessing FTX customer assets. The judge approved that motion as well.
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,” U.S. Attorney Damian Williams said in a statement Tuesday.
It is not clear how Bankman-Fried intends to build his defense with the growing number of witnesses against him. Per CNBC, Ryan Salame, another former FTX executive, drew the attention of regulators to a possible fraudulent activity going on at the exchange. The former co-CEO at FTX, flagged “possible mishandling of clients’ assets” to Bahamian regulators two days before the crypto exchange filed for bankruptcy protection, according to a filing from the Securities Commission of the Bahamas.
Allegations against Bankman-Fried include investing $8 billion worth of customers’ assets in extravagant real estate and vanity projects. The U.S. attorney’s office for the SDNY said he spent the money on matters like stadium naming rights and political donations.