NEW YORK — FTX founder Sam Bankman-Fried pleaded not guilty Tuesday in the multibillion-dollar fraud case against him in Manhattan Federal Court.
The 30-year-old claimed his innocence on two counts of wire fraud and six counts of conspiracy, including conspiring to launder money from his crypto-trading platform to his hedge fund, and violating campaign finance laws. At the packed hearing, Federal Judge Lewis Kaplan set an Oct. 2 trial date.
Bankman-Fried, who wore a navy suit, patterned tie and brown leather shoes, nervously chewed the sides of his mouth throughout the 30-minute proceeding. He faces more than a century in prison if convicted of charges he diverted mountains of FTX customers’, investors’ and lenders’ cash to his trading firm, Alameda.
Manhattan Assistant U.S. Attorney Danielle Sassoon said the disgraced entrepreneur took meticulous steps to ensure Alameda received preferential treatment, including through code and software built into it and FTX’s products.
In June, Sassoon said Bankman-Fried borrowed billions from FTX — the world’s second largest crypto trading platform — to repay loans Alameda was unable to pay back. Funds were also laundered through political and charitable donations, she said.
The walls came crashing down in November when Alameda’s balance sheets were leaked and the head of the world’s biggest crypto exchange, Binance, tweeted about FTX, Sassoon said. That prompted a surge in withdrawals by customers, revealing the $8 billion hole in its accounts.
FTX, valued at more than $30 billion at its peak, filed for Chapter 11 bankruptcy protection on Nov. 11.
Sassoon estimated more 1 million victims were scammed as a result of the “unique and concealed” relationship between FTX and Alameda.
Bankman-Fried has been out on $250 million bond — the largest-ever package of its kind — since his initial Dec. 22 appearance after his extradition from the Bahamas, where FTX was headquartered.
He became animated in court when Sassoon successfully requested Kaplan prohibit him from accessing FTX or Alameda’s assets, furiously writing messages to his lawyers on a legal notepad and pointing to them with a pen. The prosecutor made the request amid reports Alameda funds had been transferred in late December, making them inaccessible for government seizures.
Bankman-Fried’s attorney Mark Cohen denied that his client had meddled with the accounts, reiterating a tweet by Bankman-Fried last Friday. But Sassoon said prosecutors aren’t taking his word for it.
“We don’t put full stock in that simply because our investigation has revealed that he has tweeted ... false statements before,” Sassoon said.
Kaplan also granted a request from Bankman-Fried to keep the names and addresses of two signees on his mammoth bond package a secret. His parents, Stanford University law professors, are the other signees.
Bankman-Fried’s top lieutenants — including his ex-girlfriend — admitted to federal crimes on Dec. 21 and agreed to cooperate against him.
Caroline Ellison, 28, Bankman-Fried’s former flame, was CEO of Alameda. The other executive who flipped, Gary Wang, 29, was the co-founder of FTX. Both have admitted to bank fraud, securities fraud and commodities fraud.
Earlier Tuesday, the feds announced a new unit dedicated exclusively to uncovering wrongdoing that occurred in Bankman-Fried’s crypto empire.
Manhattan U.S. Attorney Damian Williams said his office was working around the clock to respond to FTX’s implosion and that it was an “all-hands-on-deck moment.”
“We are launching the (Southern District of New York) FTX Task Force to ensure that this urgent work continues, powered by all of SDNY’s resources and expertise, until justice is done,” said Williams.
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