Sam Bankman-Fried’s not guilty plea to several federal fraud charges was largely anticipated and something a few legal experts suggested was a tactical response.
The former CEO of crypto exchange FTX, whose company collapsed in November, made the plea in Federal District Court in New York.
It’s very common in the federal criminal justice system for defendants to plead not guilty at their initial appearance, Mary Beth Buchanan, a former U.S. attorney now advising blockchain companies, said to TechCrunch.
The expedited timeline of FTX’s collapse and the legal actions against those involved was unexpected and unprecedented.
“Personally, and judging only from what is publicly known, I think the chances of a plea bargain at the outset of the case are very slim.” AnChain.AI's Michael Fasanello
In less than two months, Bankman-Fried faced eight federal criminal charges, while others close to him — including FTX co-founder and former CTO Gary Wang and Alameda Research CEO Caroline Ellison — pleaded guilty to multiple charges and accepted plea agreements.
But Bankman-Fried pleaded not guilty “because he had the absolute right to do so,” Anthony Sabino, a professor of law at The Peter J. Tobin College of Business at St. John’s University, said to TechCrunch. “And it was the smart play. Keep your options open. Do not give the government an edge. Wait it out. A deal can always be made later.”
Michael Fasanello, crypto compliance officer at AnChain.AI, agreed. “The initial plea of ‘not guilty’ is really just a formality of process and recognition of the charges by the defendant.”
By pleading not guilty, it gives Bankman-Fried more room to try and strike a deal with prosecutors, if that’s something he and his lawyers want, Sabino noted.
Lewis Kaplan, the senior judge of the U.S. District Court for the Southern District of New York, set Bankman-Fried’s next trial date for October 2. But not everyone expects that date to be set in stone or is confident that Bankman-Fried will hold his plea until then.
“This is not a case where you want to either plead ‘not guilty’ and wage all-out war or plead ‘guilty’ and throw yourself on the mercy of the court,” Fasanello said. “The middle ground is the sweet spot, here.”
Bankman-Fried’s defense team will need more time to prepare, given the expected mountain of evidence to sift through, Sabino said. “Far more important, it is more likely than not the prosecutors and SBF will talk a deal. So time will be needed to negotiate a plea bargain.”