Image Source: Forbes
The former boss of the now-defunct cryptocurrency exchange FTX has officially denied that he scammed customers and investors.
Sam Bankman-Fried was accused in a US court of using customer deposits at FTX to pay for his other business, Alameda Research, buy property, and give money to political campaigns. He pleaded not guilty.
He was taken into custody last month, but a bail package worth $250 million (£208 million) got him out of jail.
But if he is found guilty, he could be sent to prison for more than 100 years.
Judge Lewis Kaplan set the date of the trial for October 2.
Two of Mr. Fried’s closest colleagues with Mr. Bankman have already pleaded guilty and are helping with the investigation, which has shaken the entire crypto industry.
Before he was arrested, the 30-year-old former billionaire said in interviews that he had made mistakes but that they were his fault.
As the case goes on, it’s common for the defense to change their pleas.
When Mr. Bankman-Fried started FTX in 2019, he was one of the best-known people in the cryptocurrency business. People knew him for his political connections, the celebrities who backed him, and the troubled companies he helped save.
But in November, many customers returned their money after hearing that the company’s finances were terrible. Because of this, FTX had to say that it was bankrupt and that billions of dollars were missing.
In a press conference, federal prosecutors said that the crash of the platform where people could buy and sell digital tokens was caused by “intentional fraud.”
Prosecutors said that Mr. Bankman-Fried stole money from FTX customers without their permission and used it to pay off debts at his other business, Alameda, and make other investments.
They told the public about eight criminal charges, such as wire fraud, money laundering, and breaking campaign finance laws. People in charge of the world of finance also sued Mr. Bankman-Fried.
Mr. Bankman-Fried was arrested in his home country of the Bahamas in December.
He was sent back to the US and given $250 million bail to escape jail. He had to wear an electronic monitoring bracelet and stay mainly at the home of his law professor parents in California.
His parents also signed the bond, which means that they will pay the money if Mr. Bankman-Fried doesn’t show up to court.
Tuesday, lawyers asked the court to keep the names of the other backers secret because they said Sam Bankman’s parents, Fried, had been getting death threats. Judge Kaplan approved this request.
FTX founder released after posting bail of $250 million
Sam Bankman-Fried, the former head of the now-defunct cryptocurrency exchange FTX, will have to stay home while he waits to be tried in the US on charges of scamming customers and investors.
A US judge ruled the 30-year-old former billionaire could go home to his parents if they paid a $250 million bond.
Mr. Bankman-Fried didn’t say he was guilty or innocent at the hearing.
He has already denied the accusations, which have shaken the entire cryptocurrency industry.
Wednesday, two of Mr. Bankman-closest Fried’s coworkers admitted to fraud and are now helping with the investigation.
At a press conference, they said it was “one of the biggest financial frauds in US history.” They announced eight charges, including wire fraud, and campaign finance violations. Regulators have also brought civil charges against the company.
Mr. Bankman-Fried was locked up for nine days in the Bahamas while he decided what to do. On Wednesday, he told the Nassau magistrates’ court that he would not fight extradition, which could have led to a long court case.
Assistant US Attorney Nick Roos said at a court hearing in New York that even though Mr. Bankman-Fried committed a “fraud of epic proportions,” prosecutors would not object to his being released on bail. He said this by pointing out that Mr. Bankman-Fried chose to return to the US alone and had lost a lot of money.
To escape jail, Mr. Bankman-Fried has to give up his passport and agree to be watched and held at his parent’s house in California. He also agreed to get care for his mental health regularly. Mr. Bankman’s lawyer, Mark Cohen, said his parents would also sign the $250 million bond.
Mr. Bankman-Fried, the son of two professors at Stanford University, started FTX in 2019.
Many people who liked the MIT graduate with curly hair called him “SBF.” He was known as the “King of Crypto” in the crypto world because he saved failing companies and gave money to charity.
The fall of his company, which was once worth more than $30 billion (£25 billion), has shaken up the industry, causing other companies to file for bankruptcy and crypto values to drop even more.
After hearing that the company was having money problems in November, customers and investors rushed to take their money out.
On the same day, Mr. Bankman-Fried quit his job as CEO. He has said that he didn’t do anything wrong on purpose and is only interested in getting customers’ money back.
At his arraignment, Mr. Bankman-Fried only spoke once, when he was asked if he understood the terms of his release and that if he didn’t show up to court, he could be charged with another crime.