A federal magistrate on Thursday ordered disgraced FTX founder
Sam Bankman-Fried released on a $250 million personal recognizance
bond signed by his parents and secured by their Palo Alto,
California, home. A prosecutor called it the largest pretrial bond
ever, Trend
reports citing ABC News.
Bankman-Fried, who did not enter a plea during the brief
hearing, appeared in a dark suit and tie with his distinctive mop
of curly hair. Shackles were not visible around his ankles but
echoed through the courtroom as he entered. Both of his parents,
former Stanford Law professors, appeared in the gallery.
The 30-year-old crypto executive is charged with defrauding
customers and investors in the now-bankrupt crypto exchange FTX. He
made his initial appearance in a New York federal court hours after
he arrived in the United States from the Bahamas, where he was
arrested last week.
“Mr. Bankman-Fried perpetrated a fraud of epic proportions,”
assistant United States Attorney Nicholas Roos said. “The evidence
is very strong.”
In addition to the bond, Magistrate Judge Gabriel Gorenstein
ordered Bankman-Fried’s passport taken and his travel restricted.
He will be under strict pretrial supervision, required to live with
his parents at their house. He can go to the gym but otherwise his
movements are limited and monitored by an ankle bracelet fitted
before leaving court.
A U.S. government plane flew Bankman-Fried, 30, to New York,
where federal prosecutors had charged him in an eight-count
indictment for fraud, conspiracy and campaign finance violations
linked to tens of millions of dollars in political donations.
Prosecutors from the Southern District of New York accused the
once-heralded advocate for transparency in crypto with being a
fraud from the moment he founded FTX, one of the largest
cryptocurrency exchanges in the world.
According to the indictment, Bankman-Fried stole $8 billion from
FTX investors and customers and used it to pay debts and expenses
of Alameda Research, his privately held hedge fund. He also used
the money to purchase lavish real estate and make political
donations to mainly Democrats but also some Republicans as he
sought influence in Washington, prosecutors said.
Bankman-Fried is due back in court Jan. 3 before Judge Ronnie
Abrams, to whom the criminal case is assigned.
The only words Bankman-Fried uttered during Thursday’s hearing
were, “Yes I do,” when asked by the judge whether he understood the
consequences of bail jumping.
The judge imposed one other restriction: Bankman-Fried can open
no new lines of credit and conduct no financial transaction in
excess of $1,000 without court approval.
Gorenstein, however, noted that Bankman-Fried has achieved
“sufficient notoriety,” which decreases the likelihood he could
transact business.
Before Bankman-Fried landed, prosecutors announced two key
associates — ex-girlfriend Caroline Ellison and FTX co-founder
Gary Wang — had quietly pleaded guilty to fraud and conspiracy
charges and agreed to cooperate, a development that adds
considerable heft to the criminal case against Bankman-Fried.
Prosecutors suggested others could be charged.
“If you participated in misconduct at FTX or Alameda, now is the
time to get ahead of it,” U.S. Attorney Damian Williams said in a
videotaped statement, referring to Bankman-Fried’s privately
controlled hedge fund. “We are moving quickly and our patience is
not eternal.”
The Securities and Exchange Commission and the Commodity Futures
Trading Commission filed related civil charges against Ellison and
Wang, saying the two played an “active role” in the scheme.
“Mr. Bankman-Fried, Ms. Ellison, and Mr. Wang left investors
holding the bag. Until crypto platforms comply with time-tested
securities laws, risks to investors will persist,” said SEC
Chairman Gary Gensler.
John Ray, the new CEO of FTX, who also oversaw the dissolution
of Enron, told members of a House committee last week that FTX
lacked corporate controls to an extent he had never witnessed,
characterizing the company’s conduct as “old-fashioned
embezzlement.”
“I’ve never seen an utter lack of record keeping,” Ray said.
“Absolutely no internal controls.”
Bankman-Fried, in an interview with ABC News’ George
Stephanopoulos in November, denied knowing “there was any improper
use of customer funds.”
“I really deeply wish that I had taken like a lot more
responsibility for understanding what the details were of what was
going on there,” Bankman-Fried told Stephanopoulos. “A lot of
people got hurt, and that’s on me.”
He also told ABC News that he had only $100,000 to his name and
one working credit card.
The arrival of Bankman-Fried in New York followed dayslong
uncertainty over whether he would waive his right to an extradition
hearing in the Bahamas, where he lived in a $30 million penthouse
while running FTX until it collapsed into bankruptcy in
November.
After a chaotic court hearing on Monday and an unexpected
absence from court on Tuesday, Bankman-Fried ultimately signed
extradition papers. He was flown to an airport in Westchester, New
York, on Wednesday night.
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