Sam Bankman-Fried has been freed on $250m, but must remain under strict supervision at parents’ California home
The former crypto multi-billionaire Sam Bankman-Fried will get to spend Christmas with his parents, who are both Stanford Law School professors.
On Thursday Bankman-Fried, who once had a net worth of $26 billion, appeared before Judge Gabriel Gorenstein in a US federal court in Manhattan, after he was extradited to the United States from the Bahamas.
The judge ruled that Bankman-Fried would be freed $250m bail on Thursday, but he would have to remain under strict supervision at his parents’ home in Palo Alto, California.
According to the Guardian newspaper, Bankman-Fried appeared gaunt and tired in a dark blue suit and ankle chains, a day after being transferred from Bahamian to FBI custody and flown directly to an airport north of New York City.
The 30-year-old faces eight charges connected to his role in the collapse of the crypto exchange FTX, after a multi-billion dollar hole was found in its balance sheet.
He has been charged by the SEC of concealing his diversion of FTX customers’ funds to crypto trading firm Alameda Research, while raising more than $1.8 billion from investors, including approximately $1.1 billion from approximately 90 US-based investors.
Meanwhile Damian Williams, the US Attorney for the Southern District of New York, described the fraud Bankman-Fried is accused of as among the largest in US history.
The DoJ has charged Bankman-Fried with conspiracy to commit wire fraud, wire fraud, conspiracy to commit commodities fraud, conspiracy to commit securities fraud, conspiracy to commit money laundering.
Bankman-Fried has also been charged with conspiracy to defraud the Federal Election Commission and commit campaign finance violations.
The charges facing Bankman-Fried carry a maximum sentence of 110 years in prison.
Under his bail conditions, Bankman-Fried will be monitored via an ankle bracelet.
He had to surrender his passport and agree to mental health and substance abuse treatment.
The Guardian noted that Judge Gorenstein warned Bankman-Fried that a warrant for his arrest would be issued if he violated any of the bail conditions, and that his parents would be liable for the $250m bond.
The judge asked Bankman-Fried if he understood the conditions. “Yes, I do,” he reportedly replied – the only words he spoke during the proceedings.
On Thursday it emerged that two former associates of Bankman-Fried have pleaded guilty to fraud charges, and are now co-operating with the US government.
Caroline Ellison 28, former CEO of Alameda Research (and Bankman-Fried’s ex-girlfriend), and Gary Wang 29, co-founder of FTX, had pleaded guilty to defrauding investors in the crypto trading platform.
The charges filed against the pair were “in connection with their roles in the frauds that contributed to FTX’s collapse”, US attorney Damian Williams said. “Both Ms Ellison and Mr Wang have plead guilty to those charges and they are both cooperating with the southern district of New York.”
Ellison pleaded guilty to seven charges of defrauding customers and investors of both FTX and Alameda, according to the agreement.
The charges against her carry a maximum penalty of up to 110 years. As part of the plea deal, she was released on a $250,000 bond.
Wang faces a similar set of charges, and faces a 50 year prison sentence. He was also released on a $250,000 bond.
The Guardian reported that in court, US prosecutors said they had a dozen co-operating witnesses in the case so far, and they have access to encrypted text messages sent between employees.
According to the SEC’s complaint, between 2019 and 2022, Ellison, “at Bankman-Fried’s direction”, furthered the scheme by manipulating the price of FTT, an FTX-issued exchange crypto-security token, by purchasing large quantities on the open market to prop up its price.
FTT served as collateral for undisclosed loans by FTX of its customers’ assets to Alameda, which is owned by Wang and Bankman-Fried.
Indeed the SEC complaint highlights the close links between FTC and Alameda, with the two companies reportedly sharing bank accounts and key staff members.
The combined funds were both ultimately under the direct control of Bankman-Fried, according to the complaint, despite the nominal authority of Ellison, his sometime girlfriend.
The SEC also alleged that FTX secretly advanced Alameda “a virtually unlimited ‘line of credit’ funded by the platform’s customers”, despite reassuring investors and depositors that it had “sophisticated automated risk measures” that would prevent any individual trade from losing customer funds.
There is also a separate civil case that accuses Bankman-Fried of illegally using investors’ money to fund Alameda Research and buy property for himself and his family.