Sam Bankman-Fried Pleads Not Guilty, and a Trial Is on the Horizon

Sam Bankman-Fried’s name has been all over the news for months. During that time, he went from the crypto industry’s savior to a CEO who mismanaged his company into the ground. In recent weeks, the narrative has changed once again, and he is now facing trial for fraud. Moreover, while he has entered a plea of not guilty, there are others involved in the case who have already pleaded guilty.

The plea: Sam Bankman-Fried entered his plea in Manhattan federal court Tuesday, pleading not guilty to eight criminal counts. The criminal counts include wire fraud and money laundering conspiracy as he stands accused of using customer deposits from FTX for his own gain.

• The money from FTX customers was used to support Alameda Research’s debt, buy real estate, and donate to political causes.
• According to a federal prosecutor, the money was laundered through “political donations, charitable donations and a variety of venture investments.”

Sam Bankman-Fried showed up to the courthouse with a clean-shaven face and suit, abandoning the t-shirts and shorts he is known for wearing. He did not speak directly to the judge, conferring with his lawyers and having them enter his plea.

The evidence: Specifics have not been disclosed to the public, but federal prosecutors have hinted at a deep well of evidence. Moreover, to secure extradition from the Bahamas, it would have required convincing the authorities there that there was cause. Additionally, several of Bankman-Fried’s associates pleaded guilty to the charges.

Carolyn Ellison, the former CEO of Alameda Research, and Gary Wang, co-founder of FTX, pleaded guilty and admitted their role in the fraud.

Ellison already revealed her knowledge of the “borrowing” of customer funds, illiquid investments, and lent money. She also admitted to covering it up with Sam Bankman-Fried and others using misleading financial statements. Wang changed computer code to allow transactions with Alameda to occur.

The trial: US District Judge Lewis Kaplan set the trial to begin on October 2nd, and a federal prosecutor on the case, Danielle Sassoon, estimated it could last around a month. Whether Ellison, Wang, or anyone else from FTX will appear to testify still remains unknown.

The repercussions: Sam Bankman-Fried faces over 100 years in prison if he is convicted of all charges. However, beyond jail time, the result of the trial might have lasting effects on the crypto industry as a whole.

If the entire FTX debacle is determined to be fraudulant and not mere mismanagement, it could sour customer and investor opinions on a wide scale. Additionally, it could open up a ton of legal action against Bankman-Fried, FTX, and others involved in the collapse.