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FTX“s Bankman-Fried arrives at New York courthouse ahead of expected not guilty plea

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Former FTX chief executive Sam Bankman-Fried, who faces fraud charges over the collapse of the bankrupt cryptocurrency exchange, walks from the Manhattan federal court after securing bail in New York City, U.S. December 22, 2022. REUTERS/Jeenah Moon

Sam Bankman-Fried entered a federal courthouse in Manhattan on Tuesday, Reuters video showed, ahead of a hearing in which he is expected to enter a plea of not guilty to criminal charges that he cheated investors in his now-bankrupt FTX cryptocurrency exchange.

Bankman-Fried is accused of looting billions of dollars in FTX customer deposits to support his Alameda Research hedge fund, buy real estate and make millions of dollars in political contributions, in what prosecutors have called a fraud of epic proportions.

A clean-shaven Bankman-Fried entered the court wearing a blue suit, white shirt and dotted blue tie while carrying a backpack at around 12:40 p.m. EST (1740 GMT). He is scheduled to be arraigned at 2 p.m. EST before U.S. District Judge Lewis Kaplan.

A person familiar with the matter told Reuters last week that Bankman-Fried would plead not guilty. A lawyer for Bankman-Fried did not reply to a request for comment. It is not unusual for criminal defendants to initially plead not guilty. Defendants are free to change their plea at a later date.

The Massachusetts Institute of Technology graduate could face up to 115 years in prison if convicted.

Bankman-Fried rode a boom in the value of bitcoin and other digital assets to build a net worth of an estimated $26 billion and become an influential political donor in the United States.

But FTX collapsed in early November after a wave of withdrawals and declared bankruptcy on Nov. 11, wiping out Bankman-Fried’s fortune. He later said he had $100,000 in his bank account.

The defendant was extradited last month from the Bahamas, where he lived and where the exchange was based.

Since his release on bond on Dec. 22, Bankman-Fried has been subject to electronic monitoring and required to live with his parents, Joseph Bankman and Barbara Fried, both professors at Stanford Law School in California.

The prosecution case was strengthened by last month’s guilty pleas of two of Bankman-Fried’s closest associates.

Caroline Ellison, who was Alameda’s chief executive, and Gary Wang, FTX’s former chief technology officer, pleaded guilty to seven and four criminal charges, respectively, and agreed to cooperate with prosecutors.

Bankman-Fried, Ellison and Wang were also sued by the U.S. Securities and Exchange Commission and the Commodity Futures Trading Commission. Ellison and Wang settled those civil cases.

FTX’s new chief executive, John Ray, known for his work on energy company Enron Corp’s bankruptcy, has said FTX was run by “grossly inexperienced” and unsophisticated people.