Tag Archives: Sam Bankman-Fried

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DOJ Seeks to Ban Sam Bankman-Fried From Contacting FTX Employees

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The Justice Department on Friday asked a federal judge to bar FTX founder

Sam Bankman-Fried

from communicating with current and former employees of the collapsed crypto exchange without a lawyer present after prosecutors alleged he recently contacted a potential witness in his criminal case.

Mr. Bankman-Fried, who faces federal charges related to the implosion of FTX, reached out to the general counsel of the company’s U.S. operation through an encrypted messaging application earlier this month, federal prosecutors said in a filing. Prosecutors said Mr. Bankman-Fried has also contacted other current and former FTX employees and are concerned that the communications could lead to witness tampering.

Prosecutors also requested the judge prohibit Mr. Bankman-Fried from communicating through encrypted messaging applications like Slack and Signal, saying that when he headed FTX he directed employees of the company and his crypto-investment firm Alameda Research to set their communications on these platforms to auto-delete after 30 days. That policy has impeded the government’s investigation, prosecutors said.

“Potential witnesses have described relevant and incriminating conversations with the defendant that took place on Slack and Signal that have already been autodeleted because of settings implemented at the defendant’s direction,” prosecutors said in the filing.

Lawyers for Mr. Bankman-Fried in a letter to the judge said the government was mischaracterizing innocuous conduct by their client in “an apparent effort to portray our client in the worst possible light.” They said the government’s request was overbroad and unnecessary, proposing instead that Mr. Bankman-Fried be prohibited from contacting certain limited witnesses, not all of FTX’s current and former employees.

FTX’s U.S. general counsel, Ryne Miller, couldn’t immediately be reached.

The Manhattan U.S. attorney’s office charged Mr. Bankman-Fried last month with stealing billions of dollars from FTX customers while misleading lenders and investors. He pleaded not guilty and is currently under court-ordered confinement in his parents’ Palo Alto, Calif., home while he awaits trial.

Mr. Bankman-Fried sent a Jan. 15 Signal message to the general counsel in which prosecutors allege he said he “would really love to reconnect and see if there’s a way for us to have a constructive relationship, use each other as resources when possible, or at least vet things with each other.”

Prosecutors didn’t identify the other employees that Mr. Bankman-Fried has allegedly tried to contact but called the communications to the general counsel and others troubling.

“Were the defendant to ‘vet’ his version of relevant events with potential witnesses, that might have the effect of discouraging witnesses from testifying in a manner contrary to the defendant’s narrative,” the Justice Department said in the filing.

Mr. Bankman-Fried’s lawyers said the message to Mr. Miller was more reasonably read as an attempt by Mr. Bankman-Fried to offer his assistance to FTX, not a “sinister attempt” to influence testimony at trial.

Write to James Fanelli at james.fanelli@wsj.com

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

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Crypto lender Genesis Trading files for bankruptcy protection

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Barry Silbert, Founder and CEO, Digital Currency Group

David A. Grogan | CNBC

Crypto lender Genesis filed for Chapter 11 bankruptcy protection late Thursday night in Manhattan federal court, the latest casualty in the industry contagion caused by the collapse of FTX and a crippling blow to a business once at the heart of Barry Silbert’s Digital Currency Group.

The company listed over 100,000 creditors in a “mega” bankruptcy filing, with aggregate liabilities ranging from $1.2 billion to $11 billion dollars, according to bankruptcy documents.

Three separate petitions were filed for Genesis’ holding companies. In a statement, the company noted that the companies were only involved in Genesis’ crypto lending business. The company’s derivatives and spot trading business will continue unhindered, as will Genesis Global Trading.

“We look forward to advancing our dialogue with DCG and our creditors’ advisors as we seek to implement a path to maximize value and provide the best opportunity for our business to emerge well-positioned for the future,” Genesis interim CEO Derar Islim said in a statement.

The filing follows months of speculation over whether Genesis would enter bankruptcy protection, and just days after the Securities and Exchange Commission filed suit against Genesis and its onetime partner, Gemini, over the unregistered offering and sale of securities.

Genesis listed a $765.9 million loan payable from Gemini in Thursday’s bankruptcy filing. Other sizeable claims included a $78 million loan payable from Donut, a high-yield, decentralized platform, and a VanEck fund, with a $53.1 million loan payable.

Gemini co-founder Cameron Winklevoss initially responded to the news on Twitter, writing that Silbert and DCG “continue to refuse to offer creditors a fair deal.”

“We have been preparing to take direct legal action against Barry, DCG, and others,” he continued.

“Sunlight is the best disinfectant,” Winklevoss concluded.

Genesis is in negotiations with creditors represented by law firms Kirkland & Ellis and Proskauer Rose, sources familiar with the matter told CNBC. The bankruptcy puts Genesis alongside other fallen crypto exchanges including BlockFi, FTX, Celsius, and Voyager.

FTX’s collapse in November put a freeze on the market and led customers across the crypto landscape to seek withdrawals. The Wall Street Journal reported that, following FTX’s meltdown, Genesis had sought an emergency bailout of $1 billion, but found no interested parties. Parent company DCG, which owes creditors a mounting debt of more than $3 billion, suspended dividends this week, CoinDesk reported.

The crypto contagion

Genesis provided loans to crypto hedge funds and over-the-counter firms, but a series of bad bets made last year severely damaged the lender and forced it to halt withdrawals on Nov. 16.

The New York-based firm had extended crypto loans to Three Arrows Capital (3AC) and Alameda Research, the hedge fund started by Sam Bankman-Fried and closely linked to his FTX exchange.

3AC filed for bankruptcy in July in the midst of the “crypto winter.” Genesis had loaned over $2.3 billion worth of assets to 3AC, according to court filings. 3AC creditors have been fighting in court to recover even a sliver of the billions of dollars that the hedge fund once controlled.

Meanwhile, Alameda was integral to FTX’s eventual demise. Bankman-Fried has repeatedly denied knowledge of fraudulent activity within his web of companies, but remains unable to provide a substantial explanation for the multibillion-dollar hole. He was arrested in December, and is released on a $250 million bond ahead of his trial, which is set to begin in October.

Genesis had a $2.5 billion exposure to Alameda, though that position was closed out in August. After FTX’s bankruptcy in November, Genesis said that about $175 million worth of Genesis assets were “locked” on FTX’s platform.

Genesis’ financial spiral has exposed Silbert’s broader DCG empire. The parent company was forced to take over Genesis’ $1 billion liability stemming from 3AC’s collapse. In a later letter to investors, Silbert disclosed an additional $575 million loan from Genesis to DCG for undisclosed investing purposes.

DCG pioneered publicly traded trusts, allowing investors to hold bitcoin and other currencies in their portfolio without direct exposure. Grayscale Bitcoin Trust’s discount to net asset value widened significantly last year as confidence in the conglomerate waned.

This is a developing story. Please check back for updates.

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Sam Bankman-Fried’s ties with the Clintons helped dupe investors

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Sam Bankman-Fried cultivated ties with A-list celebrities, politicians and investors alike — but one power couple in particular was key to boosting his profile in influential and moneyed circles.

Bill Clinton was paid north of $250,000 when he spoke at the disgraced FTX CEO’s Crypto Bahamas Conference in April, sources told The Post. At the over-the-top tropical shindig, the ex-US president along with former UK Prime Minister Tony Blair were famously photographed onstage next to Bankman-Fried, who appeared wearing shorts and a T-shirt.

Shortly thereafter, Bill and Hillary Clinton invited the 30-year-old Bankman-Fried — known as “SBF” in crypto circles — to speak at their annual Clinton Global Initiative in New York — an effective endorsement of the former FTX CEO that played a pivotal role in elevating his reputation among politicians and deep-pocketed investors alike, insiders told The Post.

On the Clinton Foundation website, Bankman-Fried’s headshot is placed alongside the likes of Matt Damon, Gavin Newson, Melinda French Gates and Larry Fink as a speaker at the September shindig. He’s also mentioned as a speaker in a press release leading up to the event.

Bill Clinton received hundreds of thousands of dollars to speak at Sam Bankman-Fried’s conference.
Getty Images

Asked for a comment about the event, a spokesperson for the Clintons replied, “SBF was never on stage at CGI,” declining to comment further. Over the past year, Bankman-Fried — who lived full-time in the Bahamas before being extradited to the United States in December — mostly spoke at conferences virtually.

People close to the Clintons say the power couple’s relationship with the scruffy 30-year-old cryptocurrency executive follows a familiar script: buzzy business leaders gain credibility by latching on to the Clintons — and in return, the Clintons get a check.

“The Clintons’ involvement gave SBF some air cover,” one former confidante told The Post.

Sam Bankman-Fried was listed as a speaker at the Clinton Global Initiative in September.

For those who bought into FTX, it has been a painful ride, with the top 50 of the bankrupt firm’s 1 million creditors owed $3.1 billion, according to court papers. This week, FTX’s new management said it aims to recoup tens of millions of dollars in political donations that Bankman-Fried and other FTX executives had made.

In response, many beneficiaries of Bankman-Fried’s money have handed everything back. Political action committees like the Democrats’ Senate Majority PAC vowed to return millions. Beto O’Rourke’s Texas gubernatorial campaign returned $1 million, while Sen. Dick Durbin (D-Ill) and incoming Speaker of the House Hakeem Jeffries (D-NY) gave their FTX donations to charity.

The Clintons, on the other hand, have remained silent. Legal experts say it’s unlikely Clinton’s speaking fee will be clawed back, but critics say it’s unseemly to hold onto the cash when thousands of people have lost retirements and savings at the hands of Bankman-Fried.

Bankman-Fried attended Super Bowl LVI in Los Angeles alongside many important famous names.
Instagram/Michael Kives

“I don’t think every public figure has to give back every dollar from every tarnished source, but it’s obviously wrong to hold onto money the orchestrator of a Ponzi scheme paid you to lend their grift credibility,” Jeff Hauser, founder and director of the Revolving Door Project, a progressive group that examines money and corruption in politics told The Post.

“They should just apologize and give the money back now,” another insider told The Post. “It’s only going to get messier.”

Sources told The Post it was former Hollywood agent Michael Kives who served as an aide to Bill and Hillary Clinton who helped connect the two. Kives — who now runs a venture firm called K5 Global — nabbed $300 million last year from FTX’s now-defunct investment arm, Alameda Research, according to reports. 

Kives declined to comment. An attorney for Bankman-Fried did not respond to a request for comment.

Bill Clinton was paid north of $250,000 when he spoke at the SBF’s Crypto Bahamas Conference.
FilmMagic

It’s not the first time the Clintons have gotten tangled up with accused fraudsters like Bankman-Fried. In 2015, they famously got tangled up with Theranos founder Elizabeth Holmes at the Clinton Global Initiative, where Bill interviewed the convicted fraudster about the future of equality and opportunity.

Holmes had even prepared to host a fundraiser for Hilary’s 2016 presidential campaign — more than five months after a blockbuster story in the Wall Street Journal broke allegations of wrongdoing. It got canceled days before.

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Sam Bankman-Fried ‘ordered FTX co-founder to create secret backdoor’ to Alameda Research

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A bombshell testimony has revealed that the co-founder of cryptocurrency exchange FTX was ordered by Sam Bankman-Fried to create a ‘secret’ backdoor to funnel money to Alameda Research.

Attorney for FTX Andrew Dietderich told the Delaware bankruptcy court on Wednesday that Gary Wang was told to create the secret line of credit of customer funds from FTX to the hedge fund.

Dietderich told the court that Wang ‘created this backdoor by inserting a single number into millions of lines of code for the exchange’ creating the line of credit, which ‘customers did not consent’ to.

The FTX attorney testified that the backdoor was a ‘secret way for Alameda to borrow from customers on the exchange without permission,’ Business Insider reported.

A bombshell testimony has revealed that the co-founder of cryptocurrency exchange FTX was ordered by Sam Bankman-Fried to create a ‘secret’ backdoor to funnel money to Alameda Research

‘Wang created this backdoor by inserting a single number into millions of lines of code for the exchange, creating a line of credit from FTX to Alameda, to which customers did not consent,’ Dietderich testified.

‘And we know the size of that line of credit. It was $65 billion.’

Bankman-Fried had moved $10 billion between the two companies, with a further $2 billion still unaccounted for, according to sources told Reuters in November.

The lawyer’s testimony corroborates allegations made by the Commodity Futures Trading Commission, the independent federal agency which ‘regulates derivatives such as futures and swaps,’ according to their website.

Last month, the CFTC filed charges against Wang and Alameda Research CEO Caroline Ellison, who was also Bankman-Fried’s on-again, off-again girlfriend.

The CFTC accused Wang of creating a ‘virtually unlimited’ secret line of credit. Dietderich’s testimony is believed to be the first time an FTX official has given the line of credit a firm dollar value.

Wang and Ellison both pleaded guilty to federal charges including fraud and conspiracy. They have been cooperating with investigators.

Attorney for FTX Andrew Dietderich told the Delaware bankruptcy court on Wednesday that Gary Wang was told to create the secret line of credit of customer funds from FTX to the hedge fund

Bankman-Fried was seen arriving for a plea hearing at U.S. Federal Courthouse in New York, Jan 3. He plead not guilty to fraud and other criminal charges

Bankman-Fried, who was arrested and extradited to the US from his home base in the Bahamas last month, is under house arrest at his parents’ $4 million Palo Alto home as per the conditions of his $250 million bond release.

While awaiting trial, Bankman-Fried published a Substack blog post on Thursday in which he professed his innocence.

‘I didn’t steal funds, and I certainly didn’t stash billions away,’ Bankman-Fried wrote.

‘Nearly all of my assets were and still are utilizable to backstop FTX customers.’

The 30-year-old disgraced former crypto king accused Binance boss Changpeng ‘CZ’ Zhao of waging a lengthy campaign to destroy his empire.

DailyMail.com uncovered a picture from March 2021, which shows SBF, 30, with his arm around ex-girlfriend Caroline Ellison, 28, from his 29th birthday. They’re pictured with FTX co-founder Gary Wang (left)

A judge set SBF’s trial to begin on October 3 during his plea hearing on Jan 3

He alleged that Zhao’s ‘fateful tweet’ on Nov 6 capped an ‘extremely effective months-long PR campaign against FTX.’

‘In November 2022, an extreme, quick, targeted crash precipitated by the CEO of Binance made Alameda insolvent,’ Bankman-Fried wrote.

The disgraced FTX founder’s business collapsed shortly after Zhao tweeted that Binance was dumping its position on FTX’s in-house digital token FTT.

The tweet started a domino effect that pushed Bankman-Fried’s crypto hedge fund Alameda Research into insolvency and FTX having to file for bankruptcy on Nov 11.

Bankman-Fried is now facing eight criminal counts, accusing him of defrauding FTX investors whose money he was holding. He made his first appearance in a Manhattan court last month, when a judge released him on bail on a $250million bond.

On January 3 he plead not guilty to fraud and other criminal charges. A judge has set his trial to begin on October 3.

Continuing to speak out publicly like this is likely to raise eyebrows, as he ignore lawyers that advised he should ‘recede into a hole.’ Attorneys said such statements will likely make life more difficult for the defense lawyers in his upcoming trial.

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Tom Brady, Gisele Bundchen, Robert Kraft ‘will lose ENTIRE investments in FTX’s $32BILLION collapse’

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Clobbered by crypto! Tom Brady, Gisele Bundchen, and Patriots owner Robert Kraft ‘are among investors who will lose their ENTIRE investments in FTX’s $32BILLION collapse’

By Alex Raskin Sports News Editor For Dailymail.com

Published: | Updated:

Tom Brady, his ex-wife Gisele Bundchen, and former employer Robert Kraft are being counted among stakeholders who lost their entire investment in FTX’s $32 billion collapse.

Bankruptcy documents filed Monday show that the Tampa Bay Buccaneers quarterback owns more than 1.1 million common shares of FTX trading, while Bundchen has another 680,000 shares. Kraft, the billionaire New England Patriots owner, has 479,000 common shares and 43,545 preferred shares through one of his companies, KPC Venture Capital LLC.

The previous value of their respective investments remains unclear, but the company itself was once valued at $32 billion after founder Sam Bankman-Fried raised $400 million in investments.

Tom Brady (pictured), his ex-wife Gisele Bundchen , and former boss Robert Kraft are being counted among stakeholders who lost their entire investment in FTX’s $32 billion collapse 

Bundchen went so far as to appear with Bankman-Fried at the Salt Crypto Bahamas Conference, where they discussed the sustainability of the cryptocurrency industry

Bankrupt companies rarely refund investors’ money because federal laws dictate creditors be repaid first and shareholders last.

‘At the end of the day, we’re not going to be able to recover all of the losses here,’ John J. Ray III, an executive specializing in recovering lost assets from failed companies, announced last month.

Brady’s agent, Don Yee, and a spokesman for Robert Kraft did not immediately respond to DailyMail.com’s request for comment.

FTX was a high-profile cryptocurrency exchange that made major inroads with investors, thanks to celebrity endorsements, including advertisements featuring Brady and Bundchen. The pair also received equity stakes in exchange for endorsing FTX.

Bankruptcy documents from the defunct crypto exchange show that the Tampa Bay Buccaneers quarterback owns more than 1.1 million common shares of FTX trading, while Bundchen has another 680,000 shares

Bundchen went so far as to appear with Bankman-Fried at the Salt Crypto Bahamas Conference, where they discussed the sustainability of the cryptocurrency industry.

Since then, FTX has collapsed, and last month, the US government filed criminal and civil charges against Bankman-Fried, the exchange’s 30-year-old founder of FTX, accusing him of widespread financial fraud.

Brady and Bundchen are also defendants in a class-action lawsuit filed by FTX investors who feel the former power couple duped them into substantial losses. The 45-year-old Brady even deleted old tweets in which he promoted FTX.

Other investors to lose money in FTX include Sequoia Capital, Tiger Global Management, and the Ontario Teachers’ Pension Plan, which previously owned the NHL’s Toronto Maple Leafs, NBA’s Toronto Raptors, MLS’ Toronto FC and CFL’s Toronto Argonauts.

Bankman-Friend faces eight federal charges, including accusations of overseeing massive fraud. He has pleaded not guilty on all counts.

Kraft, the billionaire New England Patriots owner, has 479,000 common shares and 43,545 preferred shares through one of his companies, KPC Venture Capital LLC

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Sam Bankman-Fried pleads not guilty to fraud charges in New York

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Former FTX chief executive Sam Bankman-Fried (C) arrives to enter a plea before US District Judge Lewis Kaplan in the Manhattan federal court, New York, January 3, 2023. 

Ed Jones | AFP | Getty Images

Sam Bankman-Fried pleaded not guilty in New York federal court Tuesday to eight charges related to the collapse of his former crypto exchange FTX and hedge fund Alameda Research.

The onetime crypto billionaire was indicted on charges of conspiracy to commit wire fraud and securities fraud, individual charges of securities fraud and wire fraud, money laundering and conspiracy to avoid campaign finance regulations.

Bankman-Fried arrived outside the courthouse in a black SUV and was swarmed with cameras from the moment his car arrived. The scrum grew so thick that Bankman-Fried’s mother was unable to exit the vehicle, falling onto the wet pavement as cameras scrambled to catch a glimpse of her son.

Bankman-Fried was hauled by security through the throng and into the courthouse in a matter of moments, with photographers scrambling to get out of the way.

Earlier in the day, attorneys for Bankman-Fried filed a motion to seal the names of two individuals who had guaranteed Bankman-Fried’s good behavior with a bond. They claimed that the visibility of the case and the defendant had already posed a risk to Bankman-Fried’s parents, and that the guarantors should not be subject to the same scrutiny. Judge Lewis Kaplan approved the motion in court.

Bankman-Fried returned to the U.S. from the Bahamas on Dec. 21, and the next day was released on a $250 million recognizance bond, secured by his family home in California.

Federal prosecutors also announced the launch of a new task force to recover victim assets as part of an ongoing investigation into Bankman-Fried and the collapse of FTX.

“The Southern District of New York is working around the clock to respond to the implosion of FTX,” U.S. Attorney Damian Williams said in a statement Tuesday.

The U.S. Attorney’s Office for the SDNY had argued that Bankman-Fried used $8 billion worth of customer assets for extravagant real estate purchases and vanity projects, including stadium naming rights and millions in political donations.

Federal prosecutors built the indictment against Bankman-Fried with unusual speed, packaging together the criminal charges against the 30-year-old in a matter of weeks. The federal charges came alongside complaints from the Commodity Futures Trading Commission and the Securities and Exchange Commission.

They were assisted by two of Bankman-Fried’s closest allies, Caroline Ellison, the former CEO of his hedge fund Alameda Research, and Gary Wang, who co-founded FTX with Bankman-Fried.

Ellison, 28, and Wang, 29, pleaded guilty on Dec. 21. Their plea deals with prosecutors came after rampant speculation that Ellison, Bankman-Fried’s onetime romantic partner, was cooperating with federal probes.

Another former FTX executive, Ryan Salame, apparently first alerted regulators to alleged wrongdoing inside FTX. Salame, a former co-CEO at FTX, flagged “possible mishandling of clients’ assets” to Bahamian regulators two days before the crypto exchange filed for bankruptcy protection, according to a filing from the Securities Commission of the Bahamas.

Bankman-Fried was accused by federal law enforcement and financial regulators of perpetrating what the SEC called one of the largest and most “brazen” frauds in recent memory. His stunning fall was precipitated by reporting that raised questions on the nature of his hedge fund’s balance sheet.

In the weeks since FTX’s Nov. 11 Delaware bankruptcy filing, the extent of corporate malfeasance has been exposed. Replacement CEO John J. Ray said there was a “complete failure of corporate control.”

Bankman-Fried was indicted in New York federal court on Dec. 9, and was arrested by Bahamas law enforcement at the request of U.S. prosecutors on Dec. 12. Following his indictment, Bankman-Fried’s legal team in the Bahamas flip-flopped on whether or not their client would consent to extradition.

This is a developing story. Check back for updates.

WATCH: Sam Bankman-Fried arrives in court

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FTX founder Sam Bankman-Fried arrives in court to face charges

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New York
CNN
 — 

Sam Bankman-Fried, the disgraced founder of bankrupt crypto exchange FTX, has arrived at a Manhattan federal court where he is set to appear to face charges that include cheating investors out of billions of dollars.

Authorities have accused Bankman-Fried of stealing customer funds from FTX to cover loans taken out by Alameda Research, FTX’s affiliated crypto hedge fund. They also say he used those funds to make investments in other companies and donate to campaigns of politicians from both parties to influence public policy.

In public statements following FTX’s collapse in November, Bankman-Fried has insisted that he didn’t commit fraud and was unaware that customer funds were being used improperly.

He is expected to plead not guilty Tuesday.

Two senior executives from Bankman-Fried’s crypto businesses — Gary Wang, the co-founder of FTX, and Caroline Ellison, who served as Alameda’s CEO — have pleaded guilty to multiple criminal charges and are cooperating with federal prosecutors.

Ellison apologized while entering her plea last month, telling the court that she “agreed with Mr. Bankman-Fried and others to not publicly disclose the true nature of the relationship between Alameda and FTX, including Alameda’s credit arrangement.”

As part of his release, Bankman-Fried is under house arrest at his parents’ home in Palot Alto, California. He is wearing a monitoring device and has surrendered his passport.

He could face up to 115 years in prison if convicted on all charges.

Last month, a US judge released him on a $250 million bond in his first appearance on American soil since his arrest in the Bahamas, where he lived and ran his businesses.

Bankman-Fried’s parents, both law professors at Stanford who co-signed his bond, have “become the target of intense media scrutiny, harassment, and threats,” defense lawyers wrote in a letter to the court, while asking to redact the names of two other co-signers, known as “sureties.”

“There is serious cause for concern that the two additional sureties would face similar intrusions on their privacy as well as threats and harassment if their names appear unredacted on their bonds or their identities are otherwise publicly disclosed,” the letter states.

Prosecutors allege that Bankman-Fried orchestrated “one of the biggest financial frauds in American history,” stealing billions of dollars from FTX customers to cover losses at its sister hedge fund, Alameda Research.

FTX and Alameda both filed for bankruptcy in December after investors rushed to pull their deposits from the exchange, sparking a liquidity crisis and triggering contagion across the crypto industry.

FTX’s new CEO, John Ray III, who made his name overseeing the liquidation of Enron in the early 2000s, said in a congressional hearing that customer funds deposited on the FTX site were commingled with funds at Alameda, which made a number of speculative, high-risk bets.

Ray described the situation at the two companies as “old-fashioned embezzlement” at the hands of a small group of “grossly inexperienced and unsophisticated individuals.”

— CNN’s Allison Morrow and Samantha Murphy Kelly contributed to this report.

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Sam Bankman-Fried Likely to Plead Not Guilty to Fraud Charges

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FTX founder

Sam Bankman-Fried

is likely to plead not guilty to fraud and other charges at his arraignment next week, according to people familiar with the matter.

The U.S. attorney’s office for the Southern District of New York earlier this month charged Mr. Bankman-Fried with engaging in criminal conduct that contributed to the cryptocurrency exchange’s collapse, alleging that he oversaw one of the biggest financial frauds in American history. Mr. Bankman-Fried is likely to appear in person in New York to enter his plea on Jan. 3, one of the people said.

Before his arrest, Mr. Bankman-Fried blamed the loss of customer funds on sloppy record-keeping and a bank-account issue that allowed Alameda Research, an affiliated trading firm, to cover large losses with money destined for FTX. His not guilty plea was widely expected.

The collapse of FTX has set off the largest crypto-related bankruptcy ever, and court filings are already shedding light on what went wrong and how complicated things could get. Here are three things to know about the company’s bankruptcy process. Photo: Lam Yik/Bloomberg News

Mr. Bankman-Fried stands at odds with his associates—

Caroline Ellison,

the former chief executive of Alameda Research, and

Gary Wang,

FTX’s former chief technology officer—who both pleaded guilty to criminal offenses similar to those Mr. Bankman-Fried was charged with. Both are cooperating with federal investigators.

The collapse of FTX and its sister trading firm Alameda have rattled the nascent world of crypto. Prosecutors allege that Mr. Bankman-Fried took billions of dollars of FTX.com customer money to pay the expenses and debts of his trading firm Alameda Research. Both companies filed for bankruptcy last month. Individual traders who entrusted FTX with their crypto are likely facing lengthy bankruptcy proceedings before they have a chance at seeing any of their funds back.

Mr. Bankman-Fried was released on a $250 million bond last week and has been ordered to stay in his parent’s Palo Alto, Calif., home after his appearance in a New York federal court following his extradition from the Bahamas.

Prosecutors say that from 2019 through November, Mr. Bankman-Fried conspired with unnamed individuals to defraud customers and lenders. He provided false and misleading information to lenders on the financial condition of Alameda, according to the indictment by the U.S. attorney’s office.

Mr. Bankman-Fried is also accused of defrauding the Federal Election Commission starting in 2020 by conspiring with others to make illegal contributions to candidates and political committees in the names of other people.

He and his associates contributed more than $70 million to election campaigns in recent years, The Wall Street Journal previously reported. He personally made $40 million in donations ahead of the 2022 midterm elections.

Mr. Bankman-Fried also faces allegations from the Securities and Exchange Commission and the Commodity Futures Trading Commission.

The SEC alleged in a civil lawsuit that Mr. Bankman-Fried diverted customer funds from the start of FTX to support Alameda and to make venture investments, real-estate purchases and political donations. The CFTC filed a lawsuit linking his allegedly fraudulent conduct at Alameda and FTX to markets that the CFTC regulates.

On Friday afternoon, Mr. Bankman-Fried returned to Twitter for the first time since Dec. 12 to defend himself against rumors that he has been moving funds out of several crypto wallet addresses associated with Alameda.

Cryptocurrency prices have cratered this year amid rising central bank rates and the collapses of a once-prominent hedge fund and crypto lenders, with bitcoin and ether plunging 64% and 67%, respectively, according to CoinDesk data. The total market cap of all digital tokens fell to $795 billion, compared with $2.2 trillion at the start of year, per CoinMarketCap data.

Write to Caitlin Ostroff at caitlin.ostroff@wsj.com and Vicky Ge Huang at vicky.huang@wsj.com

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8



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Sam Bankman-Fried meets with The Big Short author Michael Lewis while on house arrest

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Author Michael Lewis, whose bestseller The Big Short was adapted into a Hollywood blockbuster, reportedly met with disgraced FTX founder Sam Bankman-Fried in recent days at the California home where he is holed up awaiting trial. 

Lewis, 62, met with Bankman-Fried for several hours on Friday at the $4 million home of the accused crypto fraudster’s parents, who are both Stanford University law professors, the New York Post reported citing sources.

Outside the home, barricades manned by private security guards seal off the residential street to keep curious onlookers at bay, an arrangement that is costing Bankman-Fried’s parents some $10,000 per week, according to the Post.

Lewis has reportedly been working on a book about Bankman-Fried for months, a project that was first revealed last month when the implosion of FTX accelerated his timeline for publication. 

Prior to Bankman-Fried’s arrest on federal charges, Lewis reportedly spent six months shadowing the 30-year-old CEO, traveling with him and interviewing him extensively. 

FTX founder Sam Bankman-Fried leaves the Federal Court in New York on Thursday after he was released on a $250 million bond and ordered to detention in his parent’s California home

A team of security guards and the Stanford police guard a closed street barricade near the residence of Sam Bankman-Fried that prevents access to the Fried home on Monday

Author Michael Lewis, whose bestseller The Big Short was adapted into a Hollywood Blockbuster, reportedly met with Bankman-Fried at the home on Friday

The Ankler first reported that literary agent Michael Snyder informed his contacts that Lewis had six months’ worth of material on Bankman-Fried – who feuded in spectacular style with his mentor, Binance founder and CEO Changpeng Zhao.

Zhao, head of the world’s largest bitcoin and crypto exchange, initially announced plans to rescue FTX, Bankman-Fried’s company, but then backed out, saying FTX was not stable.

Lewis likened the pair to Luke Skywalker and Darth Vader.

‘Michael hasn’t written anything yet, but the story has become too big for us to wait,’ the agent said in his email, obtained by The Ankler.

Lewis’ previous books The Big Short, Moneyball and The Blind Side were all turned into Hollywood blockbusters. 

It’s unclear whether Bankman-Fried would stand to benefit financially if Lewis’ upcoming book about him were turned into a movie. 

Typically, studios do not have to pay to obtain life rights for public figures, especially if they option a work of non-fiction for adaptation.

Bankman-Fried’s parents Barbara Fried and Joseph Bankman are both Stanford University law professors. They are seen above leaving court last week 

The family is reportedly paying $10,000 per week for the private security patrols sealing off their residential street and keeping onlookers away

Disgraced FTX-founder Sam Bankman-Fried will be spending his house arrest at this five-bedroom home in the Bay Area after being released on $250million bond Thursday

However, even some convicted criminals have taken payouts from studios eager to avoid lawsuits. In one case, the con artist Anna Sorkin took $320,000 from Netflix for the rights to adapt her life story, though the funds reportedly went to pay restitution and fines. 

Bankman-Fried has not been convicted of any crime, but is free on $250 million bail as he awaits trial on federal charges including wire fraud, commodities fraud, securities fraud, money laundering, and campaign finance law violations. 

In August, Lewis discussed in broad terms his upcoming book about Bankman-Fried in an interview with Financial News.

‘I really don’t want to reveal exactly what I’m writing about,’ he said.

‘But I found a character through whom I can write about — it weirdly links up Flash Boys, The Big Short and Liar’s Poker.

‘I guess it is possible it will be framed as a crypto book, but it won’t be a crypto book.

‘It’ll be about this really unusual character. You’ll learn all about crypto and you’ll learn about what screwed up market structure in the United States and so on.’

Sam Bankman-Fried is depicted in court on Thursday where he was granted $250million bail

FTX had a one-time valuation of $32 billion before collapsing in bankruptcy last month amid allegations that billions in client funds were siphoned off to prop up Bankman-Fried’s hedge fund, Alameda Research.

Bankman-Fried, arrested in the Bahamas two weeks ago, was brought to the United States last week to face charges that he cheated FTX investors and looted customer deposits.

He was freed on a $250 million personal recognizance bond to live with his parents in Palo Alto, California, after an electronic monitoring bracelet was attached to him so authorities could track his whereabouts.

On Tuesday, the case was reassigned to Judge Lewis A. Kaplan, after the judge originally assigned recused herself because her husband worked for a law firm that had once done work related to FTX. 

Kaplan, 78, who has held senior status in Manhattan federal court for over a decade, was nominated to the bench by President Bill Clinton in 1994 and has a reputation as a non-nonsense jurist.

He has overseen numerous high-profile trials and is currently presiding over the two federal civil suits that former Elle magazine advice columnist E. Jean Carroll filed against former President Donald Trump.

Carroll said Trump raped her in the dressing room of a Manhattan luxury department store in 1995 or 1996. Trump has denied the accusations. A trial is scheduled for April.

The storied judge also was presiding over sex abuse claims by an American woman against Prince Andrew before the two sides settled earlier this year, with Andrew declaring that he never meant to malign her character and agreeing to donate to the woman’s charity. Prior to the settlement, Kaplan had refused Andrew’s request to toss the lawsuit.

Most recently, Kaplan presided over the civil trial of Kevin Spacey after a fellow actor accused him of trying to molest him in his apartment after a party when he was 14 and Spacey was 26. 

A jury sided with Spacey, finding that actor Anthony Rapp had not proved his case against him. 

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Entertainment

Harry and Meghan likened to ‘narcissists’ Kanye West, Trump

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What do Prince Harry and Meghan Markle have in common with the likes of Donald Trump, Kanye West, Elon Musk, Elizabeth Holmes and Sam Bankman-Fried?

According to Politico Magazine editor Joanna Weiss, they are all attention-seeking narcissists who have overstayed their welcome — and some have gotten their just deserts.

In her latest opinion piece, titled “2022 Is the Year We All Finally Got Tired of Narcissists,” Weiss makes the argument that by doggedly pursuing the limelight, the Duke and Duchess of Sussex have gone from sympathetic figures to sources of annoyance — not unlike some of the other larger-than-life public figures who have fallen from grace.

Politico editor Joanna Weiss argues that the docuseries “Harry and Meghan” exposes the former royal couple as fame-hungry narcissists.
Netflix
Meghan appears in the documentary, which was made as part of her and Harry’s $100 million development deal with Netflix.
Netflix

“My natural sympathy for the couple started turning to irritation, and it occurred to me that ego has its limits,” Weiss writes, referring to her experience of watching the former royal couple’s Netflix documentary, “Harry and Meghan.”

“And it struck me that the overreach that led to the Sussexes’ critically panned mega-series is the same impulse that turned Elon Musk into a terror on Twitter, that prompted Ye to up the ante of outrageous behavior until he crossed the line into blatant antisemitism, that sent Bankman-Fried from the top of the world to a Bahamian jail,” she adds.

Weiss conceded that while the Sussexes air some “legitimate complaints” in their six-part docuseries, which premiered earlier this month, she laments that those are “wedged between glamour shots from footage of Meghan getting fitted for ballgowns to a vast collection of flattering photos and videos they took during their royal exit, apparently preparing for a photogenic tell-all.”

Another notorious narcissist, according to Weiss, is Kanye West, who suffered a fall from grace after making a litany of anti-Semitic remarks.
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Weiss argues that the pair made some smart choices upon their exit from the British royal family, including signing a reported $100 million development deal with Netflix and landing a reported $20 million advance for Harry’s tell-all memoir, “Spare,” but according to the Politico editor, their documentary did them a disservice by exposing their “vanity” to the world.

Weiss, however, admits that while Harry and Meghan may be “tiresome,” they are “benign” compared to some of the world’s most notorious narcissists, including West, now known as Ye, who saw his fame curdle to infamy and his lucrative Adidas deal dissolve into thin air after spewing a litany of anti-Semitic remarks.

Wunderkind FTX founder Sam Bankman-Fried has been charged with fraud and money laundering.
AP
Theranos founder Elizabeth Holmes was sentenced to 11 years in prison for fraud on November 18, 2022.
Photo by Justin Sullivan/Getty Images

Weiss also makes the case that 2022 has been a banner year for narcissists’ comeuppance, with disgraced Theranos founder Holmes and cryptocurrency wunderkind Bankman-Fried both rocked by cataclysmic reversals of fortune.

“The more adulation they got, the more dramatic the fall,” Weiss writes.

Holmes, who had set out to disrupt medicine with her innovative blood-testing company — but did not have the technology to actually make it happen — was convicted of fraud and sentenced in November to 11 years in prison.

Bankman-Fried, the founder of the FTX cryptocurrency exchange, was going to revolutionize finance. Instead, he was arrested in the Bahamas last week after being indicted on fraud, money laundering and conspiracy charges for allegedly running a Ponzi scheme that swindled investors.

And then there is Musk, who was displaced as the world’s wealthiest man after his chaotic takeover of Twitter, which sparked an exodus of users from the social media platform and caused shares of one of his other companies, Tesla, to tumble 30% this month.

The bombastic billionaire seemed to have reached his nadir last week when he asked Twitter users to weigh in on whether he should step down as CEO, and more than 57% voted “yes.” Musk said he would comply with the results of the poll as soon as he finds someone “stupid enough” to replace him.

According to Weiss, this year also has been particularly bad for another prominent “narcissist,” Trump, who found himself mired in investigations, saw his Florida estate, Mar-a-Lago, raided by FBI agents and suffered through disastrous midterm elections, where the vast majority of his hand-picked candidates lost.

To top it all off, the House January 6 select committee earlier this month made criminal referrals for the 45th president stemming from his role in the thwarted insurrection.

Billionaire Elon Musk saw his fortune shrink following his chaotic takeover of Twitter.
NTB/AFP via Getty Images
Donald Trump had a bad year marked by the Jan. 6 hearings, the Mar-a-Lago raid and disastrous midterm elections.
CQ-Roll Call, Inc via Getty Imag

“If Trump is no longer invincible, his allies of convenience finally have reason to ignore him,” the article states. “And for Trump, there’s nothing worse than being ignored.”

But according to Weiss, Trump’s case could serve as a teachable moment. When he unveiled a line of NFTs featuring artist renderings of the former host of “The Apprentice” dressed as a superhero, an astronaut and a cowboy, he was brutally mocked by his critics and supporter alike — but 45,000 of the arguably cringey NFTs still sold out in less than 24 hours.

Weiss believes there is an important lesson to be drawn from that: “It’s hard to count any narcissist out; it’s not in their nature to give up the stage, even in exile, sometimes from jail. When they want attention, they get creative.”

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