Disgraced FTX founder Sam Bankman-Fried is expected to enter a plea of "not guilty" next week as he faces eight federal charges in the Southern District of New York related to the downfall of his crypto exchange, according to a report from the Wall Street Journal, citing a person familiar with the situation.
Bankman-Fried is expected to enter his not guilty plea in person in Manhattan on January 3.
FTX collapsed in November following a selloff of its FTT token and a liquidity crunch on the exchange, which had used celebrities like Tom Brady and Larry David to bolster its image as its valuation ballooned to $32 billion by early 2022.
US Department of Justice Investigating Massive FTX Hack: Report
The United States Department of Justice is investigating the hundreds of millions of dollars’ worth of cryptocurrency taken in unauthorized transactions from collapsed exchange FTX, according to a report on Tuesday. FTX was hit with a mystery attack on November 11, shortly after it filed for Chapter 11 bankruptcy, adding a surprise twist to the saga around the exchange and its outspoken founder, Sam Bankman-Fried (SBF). The funds were then moved around to other exchanges and converted into diffe...
The exchange had reportedly allowed trading firm Alameda Research, also founded by Bankman-Fried and purportedly a separate company, to tap into ample liquidity with “secret exemptions” from liquidation rules. Alameda allegedly used billions of dollars’ worth of FTX customer funds to plug holes in its own balance sheet following the downfall of Terra this past summer.
In various interviews following FTX’s collapse, Bankman-Fried blamed the liquidity crisis on mistakes and mismanagement, but denied knowingly breaking the law or misleading investors.
“Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here,” wrote new FTX CEO John J. Ray III in a November bankruptcy filing, detailing various shortcomings of the firm’s previous management.
Bankman-Fried was ultimately arrested in the Bahamas earlier this month, where FTX was based, and charged with eight counts of fraud by United States prosecutors.
gm: Tezos Co-Founder Kathleen Breitman Sounds Off on FTX Collapse
Tezos co-founder Kathleen Breitman has been in crypto since the beginning and has seen a lot of cycles and failures. She joined Stacy Elliott and Dan Roberts and brought the fire on FTX and Sam Bankman-Fried’s mismanagement, “decentralization theater,” Tezos’s reputation and positioning, crypto sports marketing, and NFTs. Watch and make sure to subscribe to the gm podcast on Apple or Spotify.
He was charged with: conspiracy to commit wire fraud on customers; wire fraud on customers; conspiracy to commit wire fraud on lenders; wire fraud on lenders; conspiracy to commit commodities fraud; conspiracy to commit securities fraud; conspiracy to commit money laundering; and conspiracy to defraud the United States and violate the campaign finance laws.
The one-time crypto mogul also faces charges from the United States Securities and Exchange Commission (SEC) and a lawsuit from the Commodity Futures Trading Commission (CTFC), which also names FTX and Alameda. Bankman-Fried was extradited to the United States last week and released into his parents’ custody on a $250 million bond.