FTX’s Sam Bankman-Fried has pleaded guilty to fraud charges

According to a source familiar with the matter, Sam Bankman-Fried is expected to enter a plea of ​​not guilty on Tuesday.

Bankman-Fried is accused of illegal use FTX Client deposits to support his hedge fund Alameda Research, buying real estate and earning millions of dollars in political donations.

He is scheduled to appear before U.S. District Judge Lewis Kaplan in Manhattan at 2:00 p.m. EST Tuesday (12:30 a.m. Wednesday) for a plea bargain.

A lawyer for Bankman-Fried did not immediately respond to a request for comment.

It is not uncommon for defendants to initially plead not guilty. Defendants are free to change their objection at a later date.

Bankman-Fried was released on bail of $250 million (about Rs. 2,000 crore) after his extradition last month from the Bahamas, where he lived and where the exchange was based.

Since his release, Bankman-Fried has been under electronic surveillance and forced to live with his parents, both of whom are professors at Stanford Law School in California.

The Massachusetts Institute of Technology graduate has been charged with two counts of wire fraud and six counts of conspiracy, including money laundering and campaign finance violations. If convicted, he faces up to 115 years in prison.

Bankman-Fried has admitted to making mistakes running FTX but said he doesn’t believe he faces criminal liability.

The 30-year-old crypto mogul boomed in the value of Bitcoin and other digital assets to become a multi-billionaire and an influential political financier in the United States until FTX collapsed after a wave of withdrawals in early November. The exchange filed for bankruptcy on November 11.

The prosecution’s case was bolstered by the guilty pleas last month from two of Bankman-Fried’s closest associates.

Caroline Ellison, Alameda’s chief executive, and Gary Wang, former FTX chief technology officer, pleaded guilty to seven and four counts, respectively, and agreed to cooperate with prosecutors.

Ellison told prosecutors she had an agreement with Bankman-Fried to hide from FTX’s investors, lenders and customers that the hedge fund could borrow unlimited amounts from the exchange, according to a transcript of her Dec. 19 hearing.

© Thomson Reuters 2022