Bankman-Fried pleads not guilty to latest charges as his lawyer worries about key witness evidence
(Kitco News) - Sam Bankman-Fried, the founder of bankrupt cryptocurrency exchange FTX and hedge fund Alameda Research, has pleaded not guilty to charges of conspiracy to violate campaign finance laws and bribery of Chinese officials.
The plea was submitted through his lawyer, Mark Cohen, at a Thursday morning hearing before U.S. District Judge Lewis Kaplan in New York. Bankman-Fried remained in California, where he is confined to his parent’s Palo Alto home under the conditions of his bail agreement.
Cohen also told the court he was planning to challenge the new charges because they were brought after Bankman-Fried’s extradition from the Bahamas. "My client is not acknowledging he can be tried," Cohen said.
Prosecutors also discussed their progress in reviewing the contents of seven electronic devices surrendered by Bankman-Fried, telling the judge the process was taking longer than expected due to the size of the devices and the volume of information they contained. Approximately 6 million pages of documents have been produced in the case to date.
Bankman-Fried's lawyer raised concerns about the contents of one of the devices held by prosecutors. “We do have a concern about Laptop B,” Cohen said. “That relates to a cooperating witness who will be an important witness on trial.”
On Feb. 28, Nishad Singh, former Director of Engineering for FTX, pleaded guilty to criminal charges, joining Alameda Research CEO Caroline Ellison and FTX cofounder Gary Wang as key witnesses in the Justice Department’s case against Bankman-Fried. Ellison and Wang struck plea deals with the DoJ in December.
On Tuesday, United States Attorney Damian Williams filed a new superseding indictment alleging that Bankman-Fried and other parties at FTX and Alameda “directed and caused the transfer of at least approximately $40 million in cryptocurrency intended for the benefit of one or more Chinese government officials” in 2021.
According to the indictment, the cryptocurrency was transferred from Alameda's main trading account to a private wallet in an attempt to persuade Chinese government officials to unfreeze Alameda accounts on “two of China’s largest crypto exchanges” which contained over $1 billion in cryptocurrency.
“After months of failed attempts to unfreeze the accounts, Samuel Bankman-Fried discussed with others and ultimately agreed to and directed a multi-million-dollar bribe to seek to unfreeze the accounts,” the filing read. The accounts were unfrozen after the bribe was received, after which Alameda accessed the cryptocurrency and used it for their trading activities.
Judge Kaplan also modified Bankman-Fried's bail conditions on Tuesday in an effort to prevent him from tampering with witnesses for his upcoming criminal trial in October.
The new conditions limit SBF to “a new phone with no internet capability and a basic laptop with limited functions.” The phone will only be able to perform voice calls and conventional text messages, with all other messaging apps disabled, and the laptop will have monitoring software to track his activity. He will be prohibited from using other electronic communication devices.
As SBF’s legal troubles continue to grow, new revelations have emerged which explain how he could be paying his mounting legal bills. According to a report from Forbes, Bankman-Fried has been paying his legal fees out of a $11.7-million-dollar gift he made to his father, Stanford Law professor Joseph Bankman, with money borrowed from Alameda in 2021.
According to two sources who spoke to Forbes, Bankman-Fried used his lifetime estate and gift tax exemption to transfer the funds to Bankman, making it a tax-free gift.
The next status conference for Bankman-Fried’s case is set for June 15 at 3:30 p.m. EDT. The criminal trial is scheduled to begin on October 2, 2023.