‘King of Crypto’ Sam Bankman-Fried could face more than 100 years in prison if convicted.
Image source, Getty ImagesThe former boss of collapsed cryptocurrency exchange FTX has officially denied charges that he defrauded customers and investors.
Sam Bankman-Fried pleaded not guilty in a US court to claims that he took customer deposits at FTX to fund his other firm, Alameda Research, buy property and make political donations.
He was released after his arrest last month on a $250m (£208m) bail package.
But he faces more than 100 years in prison if convicted.
Two of his closest colleagues have pleaded guilty and are cooperating with the investigation, which has shaken the entire cryptocurrency industry.
In interviews before his arrest, the 30-year-old former billionaire admitted failings but put the problems down to his own “mistakes”.
It is not unusual for defendants to change their pleas as the legal proceedings unfold.
Mr Bankman-Fried, who founded FTX in 2019, was one of the most high-profile figures in the cryptocurrency industry, known for his political ties, celebrity endorsements and bailouts of other struggling firms.
But in November, a wave of customer withdrawals sparked by reports of shaky finances forced FTX to declare bankruptcy and reveal billions of dollars worth of missing funds.
In a press conference last month, federal prosecutors said the meltdown at the platform, which allowed customers to buy and sell digital tokens, stemmed from “intentional fraud”.
Prosecutors accused Mr Bankman-Fried of misappropriating FTX customer funds to pay debts at his other company, Alameda, and to make other investments.
They announced eight criminal charges, including wire fraud, money laundering and campaign finance violations. Financial regulators also brought claims against Mr Bankman-Fried.
Mr Bankman-Fried was arrested in December in the Bahamas, where he lived and FTX was based.
He was extradited to the US, where he was freed on a $250m bail package. His bail conditions required that he wear an electronic monitoring bracelet and remain largely confined to the California home of his parents, law professors at Stanford University.
His parents co-signed the bond, guaranteeing the money if Mr Bankman-Fried fails to appear in court.
In court filings on Tuesday, attorneys asked to keep the identities of the other backers secret, saying Sam Bankman-Fried’s parents had been receiving threats.