Judge Allows FTX Founder Bankman-Fried to Be Released on $250 Million Bond to Parents’ Home

Jack Phillips
By Jack Phillips
December 22, 2022Business News
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A judge on Dec. 22 allowed FTX founder Sam Bankman-Fried to be released on $250 million bond and placed under house arrest at his parents’ home after his first court appearance on U.S. soil.

A federal magistrate judge, Gabriel Gorenstein, allowed Bankman-Fried to be released to his parents’ Palo Alto, California, home, after the FTX founder’s first court appearance in Manhattan. Earlier this week, the crypto exchange founder was sent from the Bahamas, where he had lived, to the United States after he agreed to extradition.

Bankman-Fried will enter a plea on a slew of charges—including fraud and campaign finance violations—at a later date, the judge said. The combined charges carry a sentence of 115 years in prison, according to federal officials.

Assistant U.S. Attorney Nicolas Roos told Gorenstein that the bail package would require Bankman-Fried to surrender his passport and remain in home confinement. He would also be required to undergo regular mental health treatment and evaluation in what Roos described as the “largest ever pretrial bond” package.

“For bail, you must consider the weight of the evidence. This was a fraud of epic proportions. If that was the only test, detention would likely be appropriate. But he voluntarily consented to extradition. That should be given weight,” Roos said, according to reports. “If he had resisted, we would have opposed release. But his assets have diminished. This is a financial crime, and he no longer works for FTX or Alameda. So the risk to the community is a marginal consideration. We propose a restrictive bail package.”

Wearing a gray suit and leg restraints, Bankman-Fried sat flanked by his lawyers and nodded when the judge informed him that if he fails to appear in court, a warrant will be issued for his arrest. He spoke only when asked by Gorenstein whether he understood the conditions of his release and that he could be charged with an additional crime if he fails to show up to court.

Gorenstein set Bankman-Fried’s next court date for Jan. 3, 2023, before U.S. District Judge Ronny Abrams, who will handle the case.

“I’m going to require strict pretrial supervision,” Gorenstein said, with conditions including electronic monitoring and a ban on opening new lines of credit or businesses.

Because of Bankman-Fried’s notoriety following FTX’s sudden collapse, Gorenstein told the hearing that “it would be very difficult for this defendant to hide without being recognized. So I believe that the risk of flight is appropriately mitigated.”

Extradition

After signing an extradition agreement, Bankman-Fried departed for the United States on Dec. 21. That came as federal officials confirmed that two of his associates pleaded guilty to several charges and were cooperating with prosecutors, suggesting that officials will have a stronger case against Bankman-Fried should it go to trial.

Caroline Ellison, former CEO of Alameda Research, a company associated with FTX, pleaded guilty to four counts. Former FTX Chief Technology Officer Gary Wang entered a similar plea, according to prosecutors.

Bankman-Fried stepped down as CEO of FTX on Nov. 11, the same day that the firm filed for bankruptcy. Earlier that month, the cryptocurrency exchange collapsed as numerous customers pulled deposits amid questions about its financial arrangements.

FTX, which was founded in 2019, rose quickly amid numerous celebrity endorsements and glowing media interviews featuring Bankman-Fried. Since the exchange’s collapse, a number of those celebrities—including NFL superstar Tom Brady, NBA Hall-of-Famer Shaquille O’Neal, and “Seinfeld” creator Larry David—have faced lawsuits.

A boom in the values of bitcoin and other digital assets propelled the exchange to a valuation of roughly $32 billion earlier this year, making Bankman-Fried, an MIT graduate, a billionaire several times over, as well as an influential donor to U.S. political campaigns. Prosecutors say that he donated to both Democrats and Republicans, but reports indicated that he more frequently donated to Democrat candidates and political action committees.

But concerns about the commingling of funds between FTX and Alameda led to a flurry of customer withdrawals in early November, ultimately forcing the exchange to declare bankruptcy on Nov. 11. Bankman-Fried later said at a New York Times conference—held weeks after his sudden downfall—that he had just $100,000 in his bank account.

Reuters contributed to this report. 

From The Epoch Times

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