Sam Bankman-Fried, the disgraced co-founder and former CEO of the cryptocurrency exchange FTX, pleaded not guilty to eight criminal charges at his arraignment on Tuesday.
Bankman-Fried flew from California to New York to enter his plea in person during a court hearing at the U.S. District Court for the Southern District in Lower Manhattan.
An attorney entered the not guilty plea on his behalf as Bankman-Fried's mother, a professor at Stanford Law School, sat two rows behind him with other family and friends at the packed courtroom. His trial is set to start on Oct. 2.
The once high-flying crypto executive is facing up to 115 years in prison over charges stemming from the spectacular collapse of FTX in November. The charges include lying to investors and taking billions of dollars of his customers' money for his own personal use.
Since Dec. 22, he has been living with his parents in Northern California after posting a bail of $250 million.
Criminal law experts had expected Bankman-Fried to plead not guilty.
"It is common for defendants to do this," said Christine Chung, a professor at Albany Law School. "A not guilty plea generally opens the door to the discovery process, which would give Sam Bankman-Fried a better idea of the evidence that the government has collected thus far in its investigation."
Attorney Mark Cohen, who represents Bankman-Fried, did not immediately respond to a request for comment, and neither did a spokesman.
Two top execs are cooperating with prosecutors
FTX, which was one of the largest cryptocurrency exchanges in the world, imploded in November amid questions about the soundness of its financials and its relationship to Alameda Research, a crypto hedge fund Bankman-Fried also founded.
Today, more than one million creditors, including FTX customers, are trying to recover money that may be gone for good.
Bankman-Fried's not guilty plea puts him at odds with two top executives at the companies he was involved with.
Gary Wang, who co-founded FTX, and Caroline Ellison, the former CEO of Alameda Research, both pleaded guilty to fraud charges and are cooperating with prosecutors.
Prosecutors allege the hedge fund was using money from FTX customers to pay debts, place speculative bets, and invest in other companies.
Wang and Ellison also pleaded guilty to charges from the U.S. Securities and Exchange Commission and the Commodity Futures Trading Commission. The SEC says they are also cooperating with its investigation.
No incentive to plead guilty
According to James Park, a securities fraud expert at UCA Law, Bankman-Fried didn't have many options going into Tuesday's hearing, because of Wang's and Ellison's plea deals.
"Sam Bankman-Fried was probably not offered a deal because he is likely the main instigator of the fraud, and there is no one higher up that he can testify against," Park said. "He thus had no incentive to plead guilty, and will attempt to leverage his ability to take the case to trial to get a more favorable sentence than is being offered at the start of the case."
Bankman-Fried was arrested last month in the Bahamas, where FTX is headquartered, at the request of the United States government. He initially said he would fight extradition, but after several days in a correctional facility in Nassau, Bankman-Fried changed tack.
On Dec. 21, the Bahamas approved and extradition request from the U.S., and Bankman-Fried was placed in FBI custody.