Sam Bankman-Fried, the founder of the now-defunct crypto exchange service FTX, pleaded not guilty to federal criminal charges of wire fraud, securities fraud, and money laundering, during his arraignment in New York on Tuesday, CNBC reports.
The presiding judge set the tentative trial date for Oct. 2. Bankman-Fried has the opportunity to change his plea going forward.
Bankman-Fried is an investor in Semafor.
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Federal prosecutors have accused Bankman-Fried of misusing customer and investor funds in one of "the biggest financial frauds in American history" by funneling it to his own Alameda Research hedge fund and directing millions of dollars in illegal campaign contributions to buy bipartisan influence.
Before his arraignment, some legal experts argued that he would have difficulty getting a lenient deal because two of his associates have already pleaded guilty and agreed to testify against him, making it difficult for Bankman-Fried to point the finger at somebody else over FTX’s collapse.
Prosecutors on Tuesday also announced the launch of a task force to recover assets lost by FTX investors.
Michael Zweiback, a white-collar criminal defense attorney and former federal prosecutor, believes Bankman-Fried would be making a big mistake going to trial as there is already substantial evidence against him.
"Maybe there are others who are outside of FTX who may have misused the client funds; maybe there are other aspects to the fraud that we haven't heard about that he could help to unravel," Zweiback told Semafor. “But, of course, he's getting to the party a little bit late because others are starting to fill in those gaps as we speak.”
He added that it will be several months after the arraignment before any major updates to the case are announced, as prosecutors begin sharing evidence with Bankman-Fried’s attorneys.
Here's a quick refresher on how Bankman-Fried got here:
- In November, Coindesk reported that Alameda, a crypto trading firm also owned by Bankman-Fried, held a significant amount of FTX's exchange token, FTT.
- Binance -- a competing exchange service and prior investor in FTX -- subsequently announced it would be selling its FTT, triggering a crash in FTT's value and massive withdrawals from FTX.
- FTX soon filed for bankruptcy and Bankman-Fried stepped down as leader.
- He was arrested in the Bahamas on Dec. 12 after the U.S. indicted him on eight criminal charges.