Following his first appearance in federal court, Sam Bankman-Fried, founder of the failed cryptocurrency exchange FTX, was released on a $250 million bond. He is accused of misappropriating billions of dollars in customer funds in one of the largest fraud schemes in US history.
The massive personal recognisance bond, described by federal prosecutors as “possibly the largest ever,” will be co-signed by his parents and two other sureties and secured by his parents’ Palo Alto, California, home.
Bankman-Fried must also wear an electronic bracelet and be subject to other electronic monitoring as a condition of his release.
He was barred from opening new lines of credit, businesses, and transactions exceeding $1,000, except to pay lawyers.
Federal law required U.S. Magistrate Judge Gabriel Gorenstein to accept the bond package unless he concluded there was no way to ensure Bankman-Fried would appear for trial. That was not the case, according to the judge, who noted that the defendant had no prior arrests or acts of violence.
“If you fail to appear in court or violate any of the conditions, a warrant will be issued for your arrest,” the judge warned, and the bond could be forfeited.
According to Gorenstein, the release conditions, particularly the electronic monitoring, “will go a long way toward ensuring the defendant is kept track of.”
“Mr. Bankman-Fried perpetrated a fraud of epic proportions” and harmed many victims, according to Assistant U.S. Attorney Nicolas Roos, who described the government’s case as strong, with multiple cooperating witnesses.
“His financial assets, which were once in the billions, have diminished significantly,” Roos said of Bankman-steep Fried’s fall.
The defendant, who was dressed in a dark suit and tie with a light-colored shirt and ankle shackles, spoke only once to assure the judge that he understood the proceedings.
“My client freely agreed to come to New York and face these charges,” defence attorney Mark Cohen said. He referred to the release conditions as a “strong package” that the defence agreed to.
The 30-year-old former mogul had been detained in the Bahamas following his arrest earlier this month, but he was extradited to the United States late Wednesday to face charges in New York.
Caroline Ellison and Gary Wang, two former business associates of Bankman-Fried, have also pleaded guilty to federal charges and agreed to cooperate with prosecutors investigating the alleged fraud scheme, according to Manhattan U.S. Attorney Damian Williams.
Ellison and Wang, like Bankman-Fried, have been charged with civil fraud by the Securities and Exchange Commission and the Commodity Futures Trading Commission.
Prior to the spectacular financial collapse, Bankman-Fried was the face of FTX, a global company with over 130 affiliates that enabled individual investors to trade cryptocurrencies, eventually becoming the third-largest exchange by volume. The company’s commercials featured famous people, and its logo was seen on an NBA stadium and MLB umpire uniforms.
According to court documents, Bankman-Fried is accused of using FTX funds to make personal investments and millions of dollars in political campaign contributions while repaying billions in loans owed by Alameda Research, a cryptocurrency hedge fund that he also founded.
The California man is charged with two counts of wire fraud conspiracy, two counts of wire fraud, and one count of money laundering conspiracy.
Each charge carries a maximum sentence of 20 years in prison.
Bankman-Fried is also charged with conspiracy to commit commodities fraud, conspiracy to commit securities fraud, and conspiracy to defraud the United States and commit campaign finance violations, all of which are punishable by up to five years in prison.
According to the SEC court complaint, Ellison, the former CEO of Alameda Research, aided the alleged fraud scheme by carrying out Bankman-instructions Fried’s to manipulate the price of FTT, an FTX-issued crypto security token.
According to the SEC court complaint, Wang, an FTX co-founder and former chief technology officer, created FTX’s software code that allowed Alameda to divert FTX customer funds and enabled Ellison to misappropriate FTX customer funds for Alameda’s trading activity.
