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NEW YORK — FTX founder and fallen cryptocurrency guru Sam Bankman-Fried pleaded not guilty through his attorney at his arraignment Tuesday on charges he misappropriated billions of dollars, defrauding customers and investors in companies he controlled while allegedly concealing his illegal handling of funds. A trial date was also scheduled for later this year.
It was the second courtroom appearance in Manhattan for Bankman-Fried, 30, who was extradited from the Bahamas last month and has been under a house arrest order on a $250 million bond for nearly two weeks. Bankman-Fried is wearing an ankle monitor and is required to remain at his parents’ home in Palo Alto, Calif., except for court appearances and exercise sessions.
He arrived at the courthouse more than an hour before his case was called, surrounded by a pack of photographers as he climbed out of a black SUV.
At the proceeding, U.S. District Court Judge Lewis A. Kaplan, who is now overseeing the case, granted anonymity to two parties who are slated to join Bankman-Fried’s parents in endorsing his bond. Bankman-Fried was previously ordered to have two more guarantors for his bond by Jan. 5, including at least one nonrelative.
Typically, bond sureties are identified in court and their names are a matter of public record. On Tuesday morning, Bankman-Fried’s attorneys submitted a letter to Kaplan requesting anonymity for the remaining two bond guarantors, citing safety concerns and noting that Bankman-Fried’s parents, who are both professors at Stanford Law School, have received alarming communications.
“In recent weeks, Mr. Bankman-Fried’s parents have become the target of intense media scrutiny, harassment, and threats,” the letter said. “Among other things, Mr. Bankman-Fried’s parents have received a steady stream of threatening correspondence, including communications expressing a desire that they suffer physical harm.”
Prosecutors did not oppose the defense attorneys’ request, but Kaplan said he would reconsider the anonymity ruling if third parties such as media organizations filed a request to do so.
Entry of a plea is required at the start of a case. The 30-year-old could change his plea as the case progresses either on his own or as part of a negotiated deal with prosecutors.
Kaplan scheduled Bankman-Fried’s trial for Oct. 2 but noted the start date could change minimally before then.
Two of Bankman-Fried’s close associates have already entered into agreements with the U.S. attorney’s office in Manhattan. In addition to pleading guilty to charges similar to those levied against Bankman-Fried, former Alameda Research CEO Caroline Ellison and former FTX chief technology officer Gary Wang agreed to cooperate with the Justice Department.
Ellison and Wang may be critical in helping prosecutors unpack what they described as an illicit commingling of finances by the FTX crypto trading platform and Alameda, which was Bankman-Fried’s hedge fund. At Tuesday’s arraignment, Assistant U.S. Attorney Danielle Sassoon described “a unique and concealed relationship” between FTX and Alameda.
“From the outset, customer deposits were deposited into bank accounts controlled by Alameda, and from the early days of the exchange, Alameda was using that customer money for Alameda operational expenses,” Sassoon added.
Prosecutors say the alleged scheme cost FTX customers billions of dollars as the company unraveled. There were so many alleged victims involved — at least 1 million — that the U.S. attorney’s office is asking for permission to send required victim notifications through a website, instead of individually as is typically done.
Kaplan also granted a request by Sassoon to bar Bankman-Fried “from accessing or transferring” assets of FTX and Alameda in the wake of Dec. 28 reporting that “some Alameda wallets had been accessed and money was transferred.” Bankman-Fried has denied involvement in those transactions, and Sassoon said the U.S. government is still investigating what transpired.
Prosecutors have said that Bankman-Fried’s personal wealth took an enormous hit as his empire collapsed around him. FTX had been the third-largest crypto exchange in the world, and its brand benefited from advertisements featuring powerhouse celebrities, including athletes such as Tom Brady and Stephen Curry.
FTX’s collapse in early November marked a major shift in the cryptocurrency landscape, shaking customer and investor trust in other major exchanges. Bankman-Fried, who is charged with wire fraud, conspiracy and related counts, is facing significant prison time if convicted in what prosecutors have called a “very strong” case. He faces up to 115 years in prison.
Bankman-Fried did several interviews in the weeks before his arrest claiming he was unaware that funds were misused. He was arrested in the Bahamas, where he lived and reportedly partied with other FTX and Alameda executives, the day before he was set to testify in front of Congress about the crumbling of his crypto exchange.
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