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Sam Bankman-Fried pleads not guilty in FTX fraud case; October test set

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NEW YORK, Jan 3 (Reuters) – Sam Bankman-Fried pleaded not guilty on Tuesday to criminal charges that he misled investors at his now bankrupt cryptocurrency exchange FTX and caused billions of dollars in damages, in what prosecutors called ” epic” cheat.

He filed his claim in federal court in Manhattan, where he faces eight criminal charges, including wire fraud and conspiracy to launder money. The 30-year-old former tycoon is accused of looting deposits from FTX clients to support his hedge fund Alameda Research, buying real estate and donating millions of dollars to political causes.

“Client funds were also used and laundered through political donations, charitable giving and a variety of risky investments,” Danielle Sassoon, federal prosecutor, said at the hearing.

Sassoon suggested the government had a lot of evidence against Bankman-Fried, saying prosecutors would turn over hundreds of thousands of documents to the defense in the coming weeks.

US District Judge Lewis Kaplan on Tuesday set a trial date of Oct. 2, which Sassoon said could last four weeks.

The government has already secured a guilty plea from two former Bankman-Fried’s associates – former Alameda chief executive Caroline Ellison and former FTX chief technology officer Gary Wang – who are cooperating with prosecutors and may testify at trial.

A clean-shaven Bankman-Fried wore a blue suit, white shirt and dotted blue tie and carried a backpack to court — a far cry from the shorts and T-shirts that were his preferred attire when running FTX from the Bahamas.

Bankman-Fried did not speak to the judge during the hearing, but spoke privately with his lawyers. He shook hands with one of the prosecutors before the prosecution. When he was finished, he approached a handful of courtroom sketch artists and commented on their work.

The Massachusetts Institute of Technology graduate faces up to 115 years in prison if convicted. He has previously acknowledged making mistakes at FTX, but said he does not believe he bears criminal responsibility.

‘MORE LENIENT’

Bankman-Fried has boomed in the value of bitcoin and other digital assets to build an estimated net worth of $26 billion and become an influential political donor in the United States.

FTX collapsed in early November after a wave of withdrawals and declared bankruptcy on Nov. 11, ending Bankman-Fried’s fortune. He later said that he had $100,000 in his bank account.

He was extradited last month from the Bahamas, where he lived and where the exchange was based.

Since his release on $250 million bail on Dec. 22, Bankman-Fried has been subjected to electronic monitoring and forced to live with his parents, Joseph Bankman and Barbara Fried, both professors at Stanford Law School in California. Fried attended his son’s hearing on Tuesday.

On Tuesday, Kaplan imposed a new bail condition, saying Bankman-Fried cannot access FTX or Alameda assets.

This came after Sassoon accused Bankman-Fried of trying to move assets to an unnamed foreign country that he thought would be “softer”. She said prosecutors were also investigating reports late last month that funds were transferred from Alameda’s cryptocurrency wallets, though she said there was no evidence that Bankman-Fried executed those transactions.

Mark Cohen, Bankman-Fried’s attorney, said his client “did not make” the Alameda transfers. Referring to the allegation that Bankman-Fried tried to move money abroad, he said his client tried to comply with a court order in the Bahamas that last month temporarily seized some assets from FTX.

The Bahamas Securities and Exchange Commission (SCB) – the Caribbean country’s financial regulator – did not immediately respond to a request for comment.

In November, the SCB instructed Bankman-Fried and Wang to transfer assets under its control, the commission’s executive director, Christina Rolle, said in a Dec. 29 affidavit filed with the Bahamas Supreme Court. The Bahamas has appointed liquidators to terminate FTX’s international trade business.

On Tuesday, Kaplan also complied with Bankman-Fried’s request not to release the names of two additional co-signers of the title.

Lawyers for Bankman-Fried said her parents, who co-signed the bond, have received physical threats since the FTX collapse and that other co-signers could face similar harassment.

Reporting by Jack Queen and Luc Cohen in New York; Additional reporting by Jonathan Stempel in New York; Editing by Noeleen Walder and Matthew Lewis

Our Standards: Thomson Reuters Trust Principles.

Luc Cohen

Thomson Reuters

New York Federal Court Reports. Previously, he worked as a correspondent in Venezuela and Argentina.

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