Disgraced crypto executive Sam Bankman-Fried has pled “not guilty” to criminal charges brought against him.
In a Manhattan federal courtroom on Tuesday (Jan. 3), the FTX founder and former CEO, whose reign atop the cryptocurrency exchange saw it dramatically implode and send fatal shockwaves throughout the entire industry, admitted no guilt in the face of charges he defrauded investors.
The plea, which was submitted through his lawyers, remains in line with Bankman-Fried’s existing narrative that he did not knowingly or intentionally commit fraud and simply suffered lapses in oversight while at the helm of his multibillion-dollar platform and its sprawling group of enterprise affiliates.
As PYMNTS previously reported, Bankman-Fried’s not guilty plea was expected, and he could change his plea later.
He is accused by the U.S. Department of Justice (DOJ) of eight criminal counts of illicitly using customer funds to support his hedge fund, Alameda Research, as well as make tens of millions of dollars of political donations and real estate purchases in what prosecutors have called “a fraud of epic proportions.”
Bankman-Fried’s not guilty plea decision sets the stage for what is sure to be one of the most high-profile and eagerly watched white collar criminal trials in recent memory.
Lawyers for Bankman-Fried, Mark Cohen and Christian Everdell, have not replied to a request for comment by PYMNTS.
Trial Set For October
As reported by Bloomberg, legal experts have indicated Bankman-Fried’s not guilty plea will help buy the failed founder more time, giving his lawyers a better sense of what evidence prosecutors have compiled against him and opening up further discovery channels.
And that appears to be the case, as U.S. District Judge Lewis Kaplan proposed an Oct. 2 start date for the USA vs. Samuel Bankman-Fried trial during the arraignment.
The previous judge, Ronnie Abrams, recused herself from the case over a potential conflict.
The government’s star witnesses include Bankman-Fried’s top two lieutenants, as PYMNTS reported earlier. Caroline Ellison, former CEO of FTX sister firm Alameda Research, and Gary Wang, FTX’s former chief technology officer and co-founder, have both entered guilty pleas in connection to the criminal charges brought against them relating to FTX’s collapse.
They are both cooperating with authorities in the hopes of receiving more lenient sentences.
The news of their plea deals was embargoed until the U.S. government had successfully extradited Bankman-Fried from the Bahamas.
Currently under house arrest on a $250 million bond at his parents’ home on Stanford’s California campus, Bankman-Fried has given interviews to “crypto influencer” Tiffany Fong and reportedly met with author Michael Lewis, who is writing a book on FTX, during his few days stateside.
More than one million creditors are trying to reclaim the money they entrusted him with, the same money he is alleged to have comingled and lost.
How Bankman-Fried, who has claimed he is down to his “last $100,000,” was able to meet the historically high requirements of his bail bond has been subject to much speculation. His legal team on Tuesday filed a motion to redact the identities of two individuals securing Bankman-Fried’s bond to protect them “from public scrutiny and potential harassment.”
Judge Kaplan accepted the motion.
As reported by PYMNTS, the individuals have not yet signed on to serve as sureties for Bankman-Fried’s bail package, but intend to do so before the upcoming Jan. 5 deadline.
What’s Next?
The government has indicated a mountain of evidence exists against Bankman-Fried. Two of his closest friends and most intimate colleagues have turned on him, admitting guilt to the very crimes he has now denied.
While Bankman-Fried has now been granted a ten-month pre-trial runway and it remains unclear what his defense strategy will be, history suggests legal minds will be hard at work looking for loopholes in unusual places.
For example, when Daniel White assassinated San Francisco Mayor George Moscone and Harvey Milk back in 1978, his legal team successfully argued that his mental state at the time of the murders was one of “diminished capacity due to depression,” laying the foundation to subsequently argue that White was not capable of premeditation with regard to his crimes.
The defendant’s lawyers pointed to White’s consumption of Twinkies, when he had previously been notably health conscious, as a symptom of the alleged depression and proof their client did not “know right from wrong.”
It worked, and White was convicted of voluntary manslaughter, rather than first-degree murder, and would go on to serve just five years in prison, while the “Twinkie defense” has entered both legal lore and public parlance.
The Salt-Sodium Defense
In his prepared testimony for a House Financial Services Committee hearing Bankman-Fried ended up being arrested in advance of, he wrote, “I am — and for most of my adult life have been — sad.”
The “medically prescribed” Emsam patch Bankman-Fried wears is meant to treat depression, among other afflictions.
Keen-eyed observers have also noted that pictures of Bankman-Fried’s desk frequently feature a 1.5 pound canister of sea salt that, as reported by Bloomberg, is labeled “Sam’s Salt Shaker.”
Could salt be to Bankman-Fried’s defense what Twinkies were to White’s?
While that day in court is still many months away, one thing for sure in the wake of his new not guilty plea: a robust defense, as surprising as his own downfall, is sure to follow.
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