Sam Bankman-Fried is expected to enter a plea deal after being accused of stealing billions of dollars in customer funds and duping investors at his now-defunct FTX cryptocurrency exchange.
On January 3, 2023, Bankman-Fried will be appearing before U.S. District Judge Lewis Kaplan in Manhattan federal court.
On Tuesday, Kaplan was chosen to oversee the case when the initial judge was unable to proceed due to a conflict of interest – her spouse’s legal practice had previously provided counsel to FTX before its failure.
Prosecutors have claimed that Bankman-Fried was involved in a massive fraudulent scheme spanning several years, in which customer funds were allegedly used to fund his Alameda Research hedge fund company, purchase real estate, and make political donations.
Bankman-Fried is facing a total of two counts, including wire fraud and conspiracy to engage in money laundering and campaign finance violations.
If found guilty, he could potentially spend a significant amount of time behind bars. Prior to his arrest on December 12th, he admitted to some risk-management issues at FTX, however, he maintained his belief that he was not legally responsible for any criminal actions.
Caroline Ellison, the former Alameda CEO, and Gary Wang, the former CTO at FTX, have both admitted to their involvement in the failure of the company and have pledged to work with authorities in the investigation. Both individuals were associates of the unnamed individual at the center of the case.
On December 22, Bankman-Fried was released from prison on a $250 million bond and was ordered to stay with his parents in Palo Alto, California where they teach at Stanford Law School.
FTX’s bankruptcy protection was filed on November 11th. In December, CEO John Ray informed Congress that the exchange had suffered a loss of $8 billion in customer funds due to the incompetence of those running it, who were described as “grossly inexperienced and unsophisticated.”