SBF to plead not guilty to buy time for his legal team

• Gary Wang, former CTO of FTX and Caroline Ellison, former chief executive of Alameda, are cooperating with investigators
• Bankman-Fried is charged with illegally using FTX customer funds to buy real estate properties and supporting Alameda Research
• He was released on a $250 million bond after being extradited to the US from the Bahamas

Sam Bankman-Fried is expected to enter a plea of not guilty today. He has been charged with cheating investors and stealing billions from the collapsed FTX cryptocurrency exchange, CNBC’s Squawk Box reported. 

According to insiders, the reasons for the plea are to buy time for his legal team to explore legal defenses and to enable the start of a discovery process, i.e. what prosecutors will have against him.

A heavy blow  

Gary Wang, former CTO of FTX and Caroline Ellison, former chief executive of Alameda, are cooperating with investigators. They pleaded guilty to four and seven criminal charges, respectively. 

This is a huge blow because they were his closest allies. They were privy to the inside workings of FTX and if there was any evidence of the charges alleged. On one hand, it seems there has been an absence of records, but insiders expect there must be some “semblance of bookkeeping.” 

Bankman-Fried is charged with illegally using FTX customer funds to buy real estate properties, support his Alameda Research hedge fund, and donate millions to various political causes. He will appear at 14:00 ET in Manhattan before US District Judge Lewis Kaplan. 

Plea might change 

It is common for criminal defendants to start with a not guilty plea. They can change their plea at a later date. 

Bankman-Fried was released on a $250 million bond after being extradited to the US from the Bahamas, where FTX was based and which he had made his home. Since his release a month ago, he has been required to live with his parents and been subject to electronic monitoring. 

He faces up to 115 years in prison

The MIT graduate has been charged with six counts of conspiracy and two counts of wire fraud, including money laundering and campaign finance violations. If he is found guilty, he faces up to 115 years in prison. 

The new CEO of FTX, John Ray, commented that the exchange had been run by “grossly inexperienced” people. Ray has worked on the insolvency of energy company Enron Corp.