Sam Bankman-Fried Released on $250M Bail Secured by Parents

In his first court appearance since being extradited from the Bahamas, the former CEO was told he can live with his parents on $250 million bail secured by their Palo Alto house.

AccessTimeIconDec 22, 2022 at 6:47 p.m. UTC
Updated Dec 23, 2022 at 5:05 p.m. UTC
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A federal judge agreed to release former FTX CEO Sam Bankman-Fried after he appeared in U.S. federal court in New York on Thursday on charges that he was the mastermind behind the fraud and illicit movement of customer funds inside his former crypto empire. The judge set bail at $250 million.

Bankman-Fried, who was brought to the U.S. overnight by the Federal Bureau of Investigation after his extradition from the Bahamas cleared on Wednesday, arrived at the courthouse in New York to face the U.S. felony charges for the first time. The case in the U.S. District Court for the Southern District of New York centers on accusations of fraud, money laundering and campaign-finance violations.

Bankman-Fried's release was secured by equity in his parents' Palo Alto, California, home, and a long list of requirements was included for him to remain free while he faces charges. He's not allowed to make financial transactions for more than $1,000, can't open new lines of credit, can't leave the house except to exercise and must go through substance-abuse and mental-health treatment, according to the agreement.

Neither Bankman-Fried nor his parents were required to put up the full amount of the bond. It is sufficient to secure a bond with assets amounting to 10% of the total bond amount. The sky-high personal recognizance bond is meant to reflect the gravity of Bankman-Fried's alleged crimes and deter the former FTX CEO from jumping bail. Still, Bankman-Fried will have to secure the signatures of at least two additional individuals with "considerable means," one of whom cannot be a family member, according to the case's judge. Whether Bankman-Fried has identified two additional signatories remains unclear, but he must do so before a Jan. 5 deadline.

The former CEO arrived at court in a crumpled suit jacket, and the sound of his restraints was audible in the quiet courtroom. When asked if he agreed to the conditions of release, he nodded. The judge then instructed him to answer aloud, and Bankman-Fried looked to one of his lawyers before saying, "Yes, I do."

Prosecutors have been closing in on the disgraced crypto frontman, inking plea deals inside the FTX inner circle. Caroline Ellison, the former CEO of FTX’s sister company Alameda Research, and Gary Wang, the other co-founder of FTX, pleaded guilty to federal charges and also admitted guilt in securities violations, according to statements from U.S. prosecutors and regulators late Wednesday.

The cooperation of Ellison and Wang – who admitted playing active roles in the company’s fraud – is likely to be key in the case against Bankman-Fried. They’ve admitted that the senior management was aware of lawbreaking in the movement of customer funds between the two firms.

Bankman-Fried has already given up his passport, and he'll be fitted with a tracking device. His parents have to secure the bail with their home-equity arrangement by Jan. 12.

Judge Gabriel Gorenstein argued that the monitoring device "would go very far to provide assurance" that he would stay put and that Bankman-Fried's fame would make it difficult for him to flee into hiding. Also, because his crimes were financial, the federal magistrate judge said it's unlikely he's a threat to anybody, made especially certain by his inability to move money or start a business now.

Ellison’s recently unsealed plea agreement says that as long as she’s helping the SDNY's investigation, as well as any other law enforcement agency involved in the case, she won't face further criminal prosecution apart from potential tax violations. Her bail was set at $250,000, and she has to forfeit her travel documents.

The charges against Bankman-Fried’s FTX cohorts further illuminated the illicit flow of customer money between FTX and Alameda, the trading firm Bankman-Fried also founded, and it described how the senior executives falsely propped up the apparent value of FTT, the exchange’s native token.

Ellison and Wang also settled enforcement actions with the U.S. Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC). In the SEC case, it listed FTT as a security – another shot across the bow in the industry’s standoff with the securities regulator.

“Caroline Ellison and Sam Bankman-Fried schemed to manipulate the price of FTT, an exchange crypto security token that was integral to FTX, to prop up the value of their house of cards,” SEC Chair Gary Gensler said in a Wednesday night statement. “Until crypto platforms comply with time-tested securities laws, risks to investors will persist.”

UPDATE (Dec. 22, 2022, 18:56 UTC): Adds details about Bankman-Fried's bail agreement.

UPDATE (Dec. 22, 2022, 19:12 UTC): Adds further details about Bankman-Fried's court appearance.

CORRECTION (Dec. 22, 2022 20:27 UTC): Fixes the date in the picture caption.

UPDATE (Dec. 22, 2022, 19:44 UTC): Adds further details about Bankman-Fried's bail requirements.


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Elizabeth Napolitano

Elizabeth Napolitano was a news reporter at CoinDesk.

Jesse Hamilton

Jesse Hamilton is CoinDesk's deputy managing editor for global policy and regulation. He doesn't hold any crypto.

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