Sam Bankman-Fried To Enter Plea Over Fraud Case

Has Bankman-Fried reached a deal with the US authorities? Yes, if a report from Reuters is to be believed. 

Following his extradition from the Bahamas, the FTX founder was granted bail, moving in with his parents in Palo Alto, California. 

SBF Expected To Enter Plea 

According to reports, Sam Bankman-Fried is expected to enter a plea over his involvement in the FTX collapse which led to millions being defrauded from investors, and billions in customer funds being lost. The collapse of FTX, one of the most prominent cryptocurrency exchanges in the space, sent shockwaves through the industry and is touted as the worst collapse in recent financial history. 

The Case Against Bankman-Fried 

According to court records, Bankman-Fried is expected to be arraigned on the 3rd of January 2023 before US District Judge Lewis Kaplan at the Manhattan Federal Court. Kaplan was assigned to the case after the original judge had to recuse herself due to a conflict of interest. This was because her husband’s law firm had advised FTX before it collapsed. Bankman-Fried faces a long list of charges brought in by prosecutors, who accused him of engaging in a years-long “fraud of epic proportions.”

Bankman-Fried is accused of using customer deposits, which he redirected to the crypto hedge fund, Alameda Research, to purchase real estate and make political donations. He is charged with two counts of wire fraud and six counts of conspiracy, including laundering money and committing campaign finance violations. If Bankman-Fried is convicted, he could spend decades behind bars. 

Bankman-Fried has been a significant political donor, with reports claiming that the FTX founder donated millions to both major political parties in the United States, the Democrats, and the Republicans. It is speculated that these donations were made most likely to protect himself in case the operations did not go to plan. According to the data available, the Democrats had received over $40 million from FTX and representatives of the exchange, while Republicans received over $23 million from the exchange. 

Caroline Ellison, Gary Wang To Cooperate With Authorities 

Meanwhile, two associates of Bankman-Fried, Caroline Ellison, CEO of Alameda Research, and Gary Wang, co-founder of FTX, had pleaded guilty to defrauding investors. Prosecutors revealed that both had agreed to cooperate with the authorities, which puts significant pressure on the former billionaire. Damian Williams, Manhattan US Attorney, urged others associated with the fraud to come forward, stating, 

“If you participated in misconduct at FTX or Alameda, now is the time to get ahead of it,” Williams said. “We are moving quickly, and our patience is not eternal. I also said that last week’s announcement would not be our last, and let me be clear once again, neither is today’s.” 

While no comment was made from the attorneys of Caroline Ellison, a lawyer for Gary Wang stated, 

“Gary has accepted responsibility for his actions and takes seriously his obligations as a cooperating witness.”

Could Bankman-Fried Get A Similar Deal? 

It is speculated that SBF could get similar deals to Ellison and Wang, with both having already paid hefty fines. However, the authorities have yet to provide further details on their course of action regarding Bankman-Fried. Speaking about the case and the options before Bankman-Fried, Jay Clayton, former US Securities and Exchange Commission Chairman, stated, 

“All of these things will be the subject of negotiation if there is a plea arrangement. Like you said before, there is a ton of considerations that are going to go into this (political, legal, financial, etc.). I think there will be tremendous pressure to reach a resolution.”

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.