Sam Bankman-Fried pleads not guilty to charges he defrauded FTX customers

Sam Bankman-Fried, the founder of bankrupt cryptocurrency exchange FTX, on Tuesday pleaded not guilty to charges that he defrauded customers out of millions of dollars worth of digital assets.

Appearing in New York before U.S. District Judge Lewis Kaplan, Bankman-Fried entered his plea after posting a $250 million bond last month. 

The U.S. Attorney’s Office for the Southern District of New York has charged Bankman-Fried with eight counts of fraud, money laundering and other financial crimes. Bankman-Fried, who stepped down as FTX’s CEO in November, also violated political contribution laws by donating to candidates and committees in New York under another person’s name, authorities said.

More specifically, prosecutors alleged that Bankman-Fried duped customers by using their crypto assets to pay for debts and expenses incurred by FTX’s hedge fund, Alameda Research. Bankman-Fried and other top executives committed commodities and securities fraud as well as created false financial records about Alameda Research to defraud lenders, prosecutors said in an indictment unsealed last month. 

Legal experts expect a prolonged court battle, with prosecutors needing to to prove Bankman-Fried intentionally swindled FTX customers. 

Gary Wang, who co-founded the company, and former Alameda CEO Carolyn Ellison have already pleaded guilty to fraud charges. Ellison and Wang are expected to serve as government witnesses during Bankman-Fried’s trial, federal prosecutors said last month.