- Sam Bankman-Fried entered a plea of not guilty to the fraud and conspiracy charges against him.
- The plea can serve as a placeholder if he decides to negotiate a deal with prosecutors.
Sam Bankman-Fried pleaded not guilty in the US government's criminal case against him over the collapse of his crypto exchange FTX.
At a hearing on Tuesday before US District Judge Lewis Kaplan in Manhattan, Bankman-Fried sat silent, sitting between his lawyers Mark Cohen and Christian Everdell. His mother and security guard sat two rows behind him in the public gallery, amid a sea of journalists. Cohen spoke for him.
"He pleads not guilty to all counts," Cohen said.
The judge set an October 2 trial date. Prosecutors said at the hearing they expect it to last four weeks.
Bankman-Fried's plea, which wasn't a surprise, doesn't necessarily mean he'll definitely be fighting the charges and heading to a trial. It may be a placeholder in the early stage of the proceedings, which will give him time to get a sense of the prosecutors' case against him and if he's interested in trying to strike a potential plea deal.
Assistant US Attorney Danielle Sassoon said at Tuesday's hearing that her team would soon make a presentation to Bankman-Fried's lawyers about the case against him. She also said prosecutors were still in the process of reviewing evidence from seized phones, banks, political groups, and former FTX and Alameda Research employees, and that they still had outstanding subpoenas that would garner even more evidence.
On Tuesday, Kaplan also granted Bankman-Fried's request to ensure that two people backing his bail agreement stay anonymous. But the judge is allowing parties, including prosecutors and the media, until January 12 to contest his decision. Sassoon said prosecutors expect to oppose the decision to seal the identities.
Bankman-Fried's lawyers had argued in a filing on Tuesday morning that concealing the identities of those backers would protect them from the kind of harassment they said has been directed at his parents, who backed their son's $250 million bail agreement with their house.
The two anonymous sureties, as they're called in legal terminology, haven't seemed to have put up any money yet. Sassoon said in Tuesday's hearing that her team would interview the co-signers in the coming days and inquire about their finances, then come to an agreement about how much money and what assets they'd need to contribute toward the bail.
Kaplan banned SBF from moving FTX or Alameda assets while he's on bail
Bankman-Fried is facing eight criminal counts against him over what the US government has described as an epic fraud that led to the loss of $8 billion in FTX customer funds. Bankman-Fried had funneled money to Alameda Research, a crypto hedge fund he also controlled, and modified software code that would allow Alameda to have a negative balance and borrow unlimited funds on the FTX exchange, prosecutors said.
The charges against Bankman-Fried — including wire fraud and conspiracy to commit money laundering — carry penalties that could amount to life in prison for the 30-year-old.
The number of victims, Sassoon said Tuesday, could exceed 1 million. She said she planned to make a formal request to set up a website to notify them, rather than contacting each one individually.
After a hearing last month, his first in the case after being extradited to the US from the Bahamas, Bankman-Fried was released on a $250 million bail agreement that requires him to stay put at his parents' home in California.
During Tuesday's hearing, Sassoon asked Kaplan to add a condition to Bankman-Fried's bail agreement: that he "be prohibited from accessing or transferring any FTX or Alameda assets or cryptocurrency."
Someone, Sassoon said, had accessed wallets from Alameda Research the prior week and moved funds, now making them inaccessible to prosecutors for the purpose of asset forfeiture. Bankman-Fried denied accessing the funds on twitter, and Cohen argued Tuesday that his client hadn't accessed the funds and that the assets were moved at the order of a Bahamian court.
Sassoon said Bankman-Fried's denials weren't believable, considering his past alleged falsehoods about what he's done with FTX clients' money.
"We don't put much stock in that," Sassoon said.
Kaplan sided with Sassoon and added the condition to Bankman-Fried's bond unless the two parties come to an agreement otherwise.
Bankman-Fried can still reach a plea deal instead of going to trial
Two of Bankman-Fried's lieutenants, Caroline Ellison and Gary Wang, have already pleaded guilty to charges stemming from the scheme and are cooperating with prosecutors.
Bankman-Fried could already be engaged in plea discussions with prosecutors — a process that can take time — about a potential resolution that could avert a trial, white-collar experts said.
"You have to enter a plea as a matter of course, so he has to answer the charges and enter the plea," said Mark Kasten of Buchanan Ingersoll & Rooney. "Just because he enters a plea of not guilty, it doesn't mean he's not working with prosecutors."
The court would ultimately decide on the length of any sentence, taking into consideration factors including the size of the scheme, and the degree to which Bankman-Fried admits guilt.
Sassoon said prosecutors would show Bankman-Fried's defense attorneys the bulk of the evidence they've collected sometime in the next two weeks. Prosecutors were still receiving other potential evidence, she said, and planned to share it all on a rolling basis.
Among the people assisting prosecutors are FTX's debtors, Sassoon said, at least one of whom granted them access to a copy of FTX's customer database hosted on an Amazon server. On May 18, the judge said, he will host a conference over Bankman-Fried's lawyers' arguments to dismiss the charges against him.
Bankman-Fried separately also has civil lawsuits pending against him by the US Securities and Exchange Commission and the Commodity Futures Trading Commission. How those cases proceed would also depend on the course of the criminal case. A criminal trial, for instance, could help him put civil suits against him on hold. He may also reach a plea agreement that would resolve those civil cases as well.