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Sam Bankman-Fried pleads not guilty to FTX collapse

Sam Bankman-Fried has pleaded not guilty in connection with the dramatic implosion of crypto exchange FTX, which he founded.

Bankman-Fried filed the lawsuit in federal court in Manhattan on Tuesday, just weeks after his December 13 arrest in the Bahamas at the request of US federal prosecutors. The former FTX boss was then extradited to the US to face charges and released on $250 million bail.

Bankman-Fried’s eight counts include wire fraud, conspiracy to commit commodity and securities fraud, conspiracy to commit money laundering and campaign finance violations.

The catastrophic collapse of its crypto trading business FTX — once valued at $32 billion — has sent shockwaves through the crypto industry and potentially caused losses for up to 1 million creditors in its Chapter 11 bankruptcy proceedings. Damian Williams, US Attorney for the Southern District of New York, has called the alleged crimes “one of the largest financial frauds in American history.”

“The case and its far-reaching consequences have certainly boosted regulatory activity, but we need much more scrutiny, not just from the US but from global market regulators, before crypto markets can be considered safe for ordinary investors,” said Carol Alexander, Professor of Finance at the University of Sussex.

Bankman-Fried is also facing a civil lawsuit from the Securities and Exchange Commission, which last month accused the former FTX chief of defrauding investors who have pumped $1.8 billion into the company since its inception in 2019. The Commodity Futures Trading The Commission also filed lawsuits against Bankman-Fried, FTX and its trading subsidiary Alameda Research for fraud and material misrepresentation.

“We contend that Sam Bankman-Fried built a house of cards on a foundation of deception while telling investors it was one of the most secure buildings in crypto,” SEC Chairman Gary Gensler said at the time.

Bankman-Fried’s plea also comes shortly after several of his former top employees at FTX pleaded guilty last month.

Caroline Ellison, former executive director of Alameda Research, and Zixiao “Gary” Wang, a co-founder of FTX, both pleaded guilty to fraud last month and have agreed to cooperate with US authorities. Ilan Graff, an attorney for Wang, said at the time that he “has accepted responsibility for his actions and takes his duties as a cooperating witness seriously.”

Peter Fox, partner at Scoolidge, Peters, Russotti & Fox, said Bankman-Fried’s plea of ​​not guilty was “not very surprising as it seems unlikely that prosecutors offered him much, if any, leniency in exchange for a guilty plea.” . It’s not clear that prosecutors want Bankman-Fried’s cooperation — which is often a key motivating factor in plea offers — because Bankman-Fried is almost certainly their primary target in this investigation.”

Source: Crypto News Deutsch

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