FTX founder Sam Bankman-Fried to be released on $250 million bond
NEW YORK – Sam Bankman-Fried, the founder of failed cryptocurrency exchange FTX, will be released on $250 million bond after his first appearance in federal court, where he is accused of misappropriating billions of dollars in customer funds in one of the world’s largest frauds. schemes in US history.
The massive personal recognizance bond, described by federal prosecutors as one of the largest ever, is to be co-signed by his parents and two other guarantors and will be secured by his parents’ home in Palo Alto, California.
As another condition of her release, Bankman-Fried must live in her parents’ home with an electronic bracelet and other electronic monitoring.
He was barred from opening new lines of credit, business and prohibited from making transactions over $1,000, except for payments to lawyers.
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U.S. Magistrate Judge Gabriel Gorenstein said federal law required him to accept the bond package unless he concluded there was no way to ensure that Bankman-Fried would appear in court, noting that there had been no prior arrest or violence.
FTX founder Sam Bankman-Fried is leaving after his first appearance in federal court in New York on Thursday. New York Judge Gabriel Gorenstein ordered Bankman-Fried released on $250 million bail while he awaits trial on fraud charges stemming from the collapse of his crypto exchange.
“If you fail to appear in court or violate any of the conditions, a warrant will be issued for your arrest” and your bond could be forfeited, the judge warned.
Gorenstein said the release conditions, especially electronic monitoring, “will go a long way in ensuring that the defendant is monitored.”
“Mr. Bankman-Fried committed a fraud of epic proportions” and harmed many victims, Assistant U.S. Attorney Nicolas Roos said, describing the government’s case as strong and including several cooperating witnesses.
Referring to the steep fall, Bankman-Frieda Roos said: “His financial assets, which once amounted to billions, have shrunk significantly.”
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The defendant, dressed in a dark suit and tie with a light-colored shirt, spoke only once, telling the judge he understood the legal proceedings.
“My client voluntarily agreed to come to New York and face these charges,” defense attorney Mark Cohen said. He described the release terms as a “strong package” accepted by the defense.
The 30-year-old former tycoon was detained in the Bahamas following his arrest earlier this month, but was extradited to the US late on Wednesday to face prosecution in New York.
Barbara Fried, mother of FTX founder Sam Bankman-Fried, arrives for his arraignment and bail hearing in Manhattan federal court on Thursday.
Two former Bankman-Fried business associates, Caroline Ellison and Gary Wang, also pleaded guilty to federal charges and agreed to cooperate with prosecutors investigating the alleged fraud scheme, Manhattan U.S. Attorney Damian Williams said.
Like Bankman-Fried, Ellison and Wang were also indicted on civil charges by the U.S. Securities and Exchange Commission and the Commodity Futures Trading Commission.
Before the spectacular financial collapse, Bankman-Fried was the face of FTX, a global company with more than 130 affiliates that allowed individual investors to trade cryptocurrencies, making it the third largest exchange by volume. The company’s ads featured prominent celebrities, and its logo appeared in an NBA stadium and on MLB umpires’ uniforms.
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U.S. Attorney Damian Williams speaks during a news conference about the criminal charges brought against FTX founder Sam Bankman-Fried on December 13.
Bankman-Fried is accused of using billions of dollars in FTX funds for personal investments and millions of dollars in political campaign contributions while paying off billions in loans owed by Alameda Research, a cryptocurrency hedge fund he also founded, according to court documents.
The California man is charged with two counts of conspiracy to commit wire fraud, two separate counts of wire fraud and one count of conspiracy to commit money laundering.
Each of the accused faces a maximum sentence of 20 years in prison.
The FTX logo is displayed at the FTX Arena where the Miami Heat NBA basketball team plays on December 6.
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, each of which carries a maximum penalty five years.
According to the SEC’s court complaint, Ellison, a former executive at Alameda Research, supported the alleged fraudulent scheme by following Bankman-Fried’s instructions to manipulate the price of FTT, the crypto security token issued by FTX.
Wang, an FTX co-founder and former chief technology officer, created FTX software code that allowed Alameda to divert FTX customer funds and allowed Ellison to embezzle FTX customer funds for Alameda’s business, the SEC alleges.
