In a severe blow to Sam Bankman-Fried, the founder of cryptocurrency exchange FTX, a federal judge has rejected his attempt to dismiss the U.S. government's criminal case, which accuses him of orchestrating a massive multibillion-dollar fraud.
U.S. District Judge Lewis Kaplan's decision sets the stage for an upcoming trial on October 2, where Bankman-Fried, a 31-year-old former billionaire, will face the charges leveled against him.
Bankman-Fried Pleads "Not Guilty" to Embezzlement of Company Funds
The allegations against Bankman-Fried are grave. Prosecutors have accused him of siphoning off billions of dollars in FTX customer funds to cover losses at his hedge fund, Alameda Research.
Additionally, he stands accused of misleading investors and lenders, as well as illegally contributing to U.S. political campaigns in the names of his colleagues. Bankman-Fried, however, has pleaded not guilty, vehemently denying the charges of fund embezzlement while acknowledging FTX's inadequate risk management.
In May, Bankman-Fried sought to dismiss a significant portion of the 13 fraud and conspiracy charges he faced. One of his arguments centered around a fraud theory known as the "right to control," which the U.S. Supreme Court had deemed invalid the previous month.
The theory suggested that a defendant could be convicted not only for depriving someone of tangible property but also for depriving them of economically valuable information. However, the judge agreed with prosecutors that this theory did not apply to Bankman-Fried, stating that the alleged misappropriated funds constituted property and pointing out factual errors in the defendant's assertions.
The judge's decision to reject the FTX Founder's bid to dismiss the charges reinforces the gravity of the case against him. It signals that the trial will move forward, and the allegations of widespread criminal activity at FTX will be examined closely.
Related Article : FTX Founder Sam Bankman-Fried Gets Fraud Charge; Denied Bail
FTX CEO Allegedly Treated Company Funds as Personal Piggy Bank; Burning Over $8.7 Billion
The newly published report on the company's finances, compiled by the exchange's new CEO and restructuring officer, John J. Ray III, further exposes the extent of the alleged wrongdoing.
The report reveals shocking details about FTX's "commingling of funds," indicating that there was a lack of distinction between customer deposits and executive spending.
Bankman-Fried and other top executives are accused of treating the company's accounts as their personal piggy bank, diverting billions-approximately $8.7 billion-of customer funds for personal investments, luxury properties, speculative trading, and even political donations. The report exposes the stark contrast between the company's public image as a champion of customer protection and the reality of its financial misdeeds.
Furthermore, the report sheds light on a plot involving Bankman-Fried and an unidentified company lawyer who allegedly created "sham documents" to conceal irregular financial dealings between FTX and its sister hedge fund, Alameda. These documents were presented to an external auditor, leading to a misleading financial audit and enabling the company to raise $400 million from investors during a fundraising round.
With the weight of evidence mounting against him, Bankman-Fried faces a daunting legal battle. The federal judge's refusal to dismiss the charges reflects the seriousness of the allegations and underscores the court's determination to hold him accountable.
