Sam Bankman-Fried pleads not guilty in FTX crypto fraud case

Sam Bankman-Fried outside the Manhattan federal court (AFP via Getty Images)
Sam Bankman-Fried outside the Manhattan federal court (AFP via Getty Images)

Former FTX founder Sam Bankman-Fried has pleaded not guilty at a New York court following charges that he cheated investors in his now-bankrupt cryptocurrency exchange.

Bankman-Fried was photographed entering the federal court in Manhatten on Tuesday ahead of his afternoon hearing before US District Judge Lewis Kaplan.

He is accused of looting billions of dollars in FTX customer deposits to support his Alameda Research hedge fund, buy real estate and make millions of dollars in political contributions, in what prosecutors have called a fraud of epic proportions.

It is not unusual for criminal defendants to initially plead not guilty. Defendants are free to change their plea at a later date.

The Massachusetts Institute of Technology graduate could face up to 115 years in prison if convicted.

Bankman-Fried rode a boom in the value of bitcoin and other digital assets to build a net worth of an estimated $26 billion (£21 billion) and become an influential political donor in the US.

But FTX collapsed in early November after a wave of withdrawals and declared bankruptcy on November 11, wiping out Bankman-Fried’s fortune.

He later said he had $100,000 (£83,000) in his bank account.

The defendant was extradited last month from the Bahamas, where he lived and where the exchange was based.

Since his release on bond on December 22, Bankman-Fried has been subject to electronic monitoring and required to live with his parents, Joseph Bankman and Barbara Fried, both professors at Stanford Law School in California.

The prosecution case was strengthened by last month’s guilty pleas of two of Bankman-Fried’s closest associates.

Caroline Ellison, who was Alameda’s chief executive, and Gary Wang, FTX’s former chief technology officer, pleaded guilty to seven and four criminal charges, respectively, and agreed to cooperate with prosecutors.

Bankman-Fried, Ellison and Wang were also sued by the U.S. Securities and Exchange Commission and the Commodity Futures Trading Commission. Ellison and Wang settled those civil cases.

FTX’s new chief executive, John Ray, known for his work on energy company Enron Corp’s bankruptcy, has said FTX was run by “grossly inexperienced” and unsophisticated people.