FTX founder Sam Bankman-Fried pleads not guilty to cheating charges

FTX founder Sam Bankman-Fried pleaded not guilty in Manhattan federal court on Tuesday to charges that he cheated investors and looted customer deposits on his cryptocurrency trading platform.

Bankman-Fried, 30, is accused of illegally diverting massive sums of customer money from FTX to make lavish real estate purchases, donate money to politicians and make risky trades at Alameda Research, his cryptocurrency hedge fund trading firm.

Bankman-Fried's attorney, Mark Cohen, announced his client's plea, saying: He pleads not guilty to all counts."

Wearing a backpack, Bankman-Fried marched through a crush of cameras as he entered the courthouse on a rainy day to make his first appearance before Judge Lewis A. Kaplan. Besides taking a plea during the arraignment, Kaplan was expected to discuss with lawyers a schedule for proceeding toward a trial.

Prior to his appearance, his lawyers sent a letter to the judge, saying Bankman-Fried's parents in recent weeks have become the target of intense media scrutiny, harassment, and threats, including communications expressing a desire that they suffer physical harm".

As a result, the lawyers requested that the names be redacted on court documents for the two individuals who were lined up to sign Bankman-Fried's USD 250 million personal recognizance bond.

Bankman-Fried was released with electronic monitoring about two weeks ago on the condition that he await trial at his parents' house in Palo Alto, California.

Carolyn Ellison, 28, who ran Alameda, and Gary Wang, 29, who co-founded FTX, have pleaded guilty to fraud charges and are cooperating with prosecutors in a bid for leniency. Both are free on bail.

Their pleas were kept secret until Bankman-Fried was in the air after his extradition from the Bahamas, where FTX is based, due to fears that he might flee.

Shortly before Bankman-Fried's arraignment, US Attorney Damian Williams announced that he was launching a task force made up of senior prosecutors in his office to investigate and prosecute matters related to the FTX collapse. He said the task force also will work to trace and recover victim assets.

The Southern District of New York is working around the clock to respond to the implosion of FTX," Williams said in a press release. It is an all-hands-on-deck moment. We are launching the SDNY FTX Task Force to ensure that this urgent work continues, powered by all of SDNY's resources and expertise, until justice is done.