The former CEO of bankrupt FTX, Sam Bankman-Fried ‘SBF’, was arraigned in a Manhattan federal court Tuesday to answer eight counts of felony charges, where he pleaded ‘not guilty’ to all of them, per coverage by CNN. The disgraced crypto entrepreneur is facing two counts of wire fraud and six counts of conspiracy-related charges.
Sam, out on a $250 million bond, is under prosecution for stealing customer funds through FTX and using them as collateral for loans taken by the affiliated crypto hedge fund, Alameda Research. The 30-year-old is also accused of using investor funds to invest in other companies and donations to politicians.
In contrast, two Bankman-Fried’s former executives – Gary Wang and Caroline Ellison – pleaded guilty to related charges. According to court documents, Ellison told the judge that, together with her former associates, they knowingly stole billions of dollars from the customers of FTX and tried to cover it up. She added that she ‘‘(conspired) with Bankman-Fried and other executives not to publicly disclose the true nature of the relationship between Alameda and FTX, including Alameda’s credit arrangement.’’
1 Million Investors Are Victims of the FTX Collapse
Many investors are facing losses following the demise of the once-major crypto exchange. According to Prosecutor Danielle Sassoon, there are more than a million victims of FTX’s demise. Sassoon plans to table a motion requesting to send notifications to the victims through a website instead of individual messages.
During the hearing, presiding judge Lewis Kaplan ruled that the names of sureties in the bonds be redacted to prevent harassment of the co-signers. Defense lawyers had told the court that Bankman-Fried’s parents, both cosigners of the bond, were turned into ‘‘targets of intense media scrutiny, harassment, and threats.’’
The trial has been moved to October 2, and according to legal experts, the former billionaire could face up to 115 years behind bars if found guilty. Bankman Fried was extradited to the US from the Bahamas, where he lived and managed his FTX empire.
The firm’s new CEO, John Ray III – overseeing the bankruptcy – told Congress that FTX commingled investor funds with that of Alameda and used them to make speculative investments. When it was discovered that the company was heavily invested in its native FTT tokens, it triggered a bank run, and investors rushed to pull out their funds.