FTX founder Bankman-Fried posted $250 million bail, house arrest

NEW YORK (AP) – Cryptocurrency entrepreneur Sam Bankman-Fried walked out of a Manhattan courthouse Thursday with his parents after they agreed to sign a $250 million bond and keep him in their California home as he awaits the trial for allegedly defrauding investors and looting customer deposits on its FTX trading platform.

Assistant US Attorney Nicolas Roos said in US District Court that Bankman-Fried, 30, “perpetrated a fraud of epic proportions.” Roos has offered stringent bail terms, including a $250 million bail — which he says is believed to be the largest pretrial federal bail ever — and house arrest at his parents’ home in Palo Alto, California.

An important reason for allowing bail is that Bankman-Fried has agreed to waive extradition, Roos said.

Reunited with his parents and lawyers inside the courthouse, a seemingly silent Bankman-Fried shook hands with a supporter before heading out the door, where photographers and video crews mobbed him until he got out in his car.

Magistrate Judge Gabriel W. Gorenstein agreed to bail and also approved the proposed house arrest, although he requested that an electronic tracking bracelet be affixed to Bankman-Fried before he left the courthouse. Roos had recommended that she be attached Friday in California.

Bankman-Fried wore a suit and tie, sat among his lawyers, and did not speak during the hearing except to answer the judge. Towards the end, Gorenstein asked him if he understood that he would be arrested and owed $250 million if he chose to flee.

“Yes, I do,” Bankman-Fried replied.

Shortly thereafter, the hearing ended and Bankman-Fried, hands in his pants pockets, was led out of the courtroom by two US marshals.

His bail conditions also require that he not open lines of credit in excess of $1,000.

The bond was to be secured by equity in his parents’ home and by the signatures of them and two other financially responsible people with substantial assets, Roos said. The bail was described as a “personal bond”, meaning that the surety did not need to meet the bail amount.

Bankman-Fried, arrested in the Bahamas last week, was flown to New York on Wednesday after deciding not to contest his extradition.

While in the air, the United States Attorney in Manhattan announced that two of Bankman-Fried’s closest business associates had also been charged and had secretly pleaded guilty.

Carolyn Ellison, 28, a former chief executive officer of Bankman-Fried’s trading firm, Alameda Research, and Gary Wang, 29, who co-founded FTX, pleaded guilty to charges including wire fraud, securities fraud and fraud in raw materials.

U.S. Attorney Damian Williams said in a video statement that both were cooperating with investigators and had agreed to assist in any prosecution. He warned others who allowed the alleged fraud to come forward.

“If you’ve participated in any misconduct at FTX or Alameda, now is the time to get ahead of it,” he said. “We are moving quickly and our patience is not eternal.”

Prosecutors and regulators allege that Bankman-Fried was at the center of several illegal schemes to use client and investor money for personal gain. He faces the possibility of decades in prison if convicted for all intents and purposes.

In a series of interviews prior to his arrest, Bankman-Fried said he never intended to defraud anyone.

Bankman-Fried is accused of using money, embezzled from FTX clients, to enable trade in Alameda, spend lavishly on real estate and make millions of dollars in campaign contributions to US politicians.

FTX, founded in 2019, quickly took the cryptocurrency investing phenomenon to great heights, becoming one of the largest digital currency exchanges in the world. Looking for clients beyond the tech world, he hired actor and comedian Larry David to appear in a TV commercial that aired during the Super Bowl, touting encryption as the next big thing.

Bankman-Fried’s crypto empire, however, collapsed abruptly in early November as clients withdrew deposits en masse amid reports questioning some of its financial deals.

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