Cofounder and former CEO of collapsed crypto exchange, FTX, Sam Bankman-Fried is expected to enter a plea next week to criminal charges, according to court filing. This follows the decision of his associates to take a guilty plea to the criminal charges leveled against them last week.
Bankman-Fried is facing criminal charges for defrauding investors billions of dollars, resulting in the implosion of FTX. His arraignment hearing, where he is expected to either plead guilty or defend the charges, is scheduled for January 3, 2023, before U.S. District Judge Lewis Kaplan in Manhattan federal court.
Kaplan was assigned to the case on Tuesday, after the original judge recused herself because her husband’s law firm had advised FTX before its collapse.
Tekedia Mini-MBA edition 14 (June 3 – Sept 2, 2024) begins registrations; get massive discounts with early registration here.
Tekedia AI in Business Masterclass opens registrations here.
Join Tekedia Capital Syndicate and invest in Africa’s finest startups here.
Bankman-Fried is facing allegations of perpetrating “fraud of epic proportions,” for years. Prosecutors said he used customer deposits to support his Alameda Research hedge fund firm, buy real estate and make political contributions.
In addition, he is charged with two counts of wire fraud and six counts of conspiracy, including laundering money and committing campaign finance violations. If convicted, Bankman-Fried is expected to spend decades in prison.
On Wednesday, the SEC filed fresh fraud charges against Bankman-Fried. The fresh charges say Sam and FTX diverted $200 million in customer funds to its venture fund, investing $100 million into a fintech company called Dave.
Before his arrest on Dec. 12, Bankman-Fried had denied engaging in any sort of fraud whilst the CEO of FTX, blaming the exchange’s collapse on oversight and negligence. But his claims, which were beginning to win him sympathy from many, were defeated after two of his associates – former Alameda chief executive Caroline Ellison and former FTX chief technology officer Gary Wang, pleaded guilty over their roles in FTX’s collapse and agreed to cooperate with prosecutors.
The exchange’s new chief executive, John Ray, had earlier raised alarm about irregularities he found in the company’s operation. He told Congress on Dec. 13 that FXT lost $8 billion of customer money while being run by “grossly inexperienced, non-sophisticated individuals.”
Bankman-Fried was accused of moving $10 billion from FTX to Alameda Research then headed by Ellison, whom he was briefly in a romantic relationship with.
FTX filed for bankruptcy on November 11 after Bankman-Fried failed to secure a bailout fund for the exchange, triggering concern and investigation into what happened to the billions of dollars belonging to the company’s investors.
Following his release on Dec. 22 on a $250 million bond, Bankman-Fried was ordered to stay with his parents in Palo Alto, California, where they teach at Stanford Law School. He was ordered not to leave the house and has been placed under electronic surveillance.
Bankman-Fried is expected to enter the guilty plea next week as incriminating evidence unfolds about what transpired in FTX – all the more so as the testimony of his former associates is expected to harm his chances of defense.