Sam Bankman-Fried was released on a huge bail following his appearance in federal court in Manhattan to face fraud charges related to the collapse of FTX and Alameda Research.
The disgraced king of cryptocurrency was extradited from the Bahamas to the US late Dec. 21. He appeared in federal court in Manhattan on Thursday but did not file a statement. His next court appearance is set for January 3.
Bankman-Fried was released after his parents, both law professors at Stanford, signed a $250 million recognition bond pledging their California home as collateral, according to multiple media reports. Two other friends with significant net worths have also reportedly signed.
This bail does not require full payment up front, but it comes into play if a defendant misses a court hearing or leaves town.
Bankman-Fried will be living in his parents’ home and will need to wear an ankle bracelet to monitor his whereabouts during the pre-trial period, which could be lengthy given the size and scope of the FTX collapse.
The FTX case is moving fast
Justice Department attorneys moved to extradite Bankman-Fried after two of his close associates pleaded guilty to multiple federal fraud charges and agreed to cooperate with prosecutors.
Zixiao (Gary) Wang, 29, a former co-founder of FTX and chief technology officer, and Caroline Ellison, 28, a former CEO of Alameda Research, the hedge fund founded by Bankman-Fried, pleaded guilty on Dec. 19 , according to the U.S. Office of Attorneys for the Southern District of New York.
“As I said last week, this investigation is ongoing,” U.S. Attorney Damian Williams said in a pre-recorded message.
Prosecutors say ‘our patience is not eternal’
Federal prosecutors are pressuring other FTX and Alameda Research employees to turn against their former boss.
“Let me reiterate a call I made last week,” Williams said in the message. “If you have participated in any misconduct at FTX or Alameda, now is the time to get ahead of it. We are moving rapidly and our patience is not eternal.”
FTX’s downfall began on Nov. 6, when Changpeng Zhao, a rival of Bankman-Fried and founder of cryptocurrency exchange Binance, announced that his group would sell its holdings in FTT, the cryptocurrency issued by FTX. . The reason Zhao gave was that he had doubts about Alameda’s budget.
FTT was the cryptocurrency issued by FTX.
The announcement, made on Twitter, prompted a rush to FTX from its clients, attempting to withdraw their funds in the form of cryptocurrencies. SBF said, on Nov. 7, that the assets were “okay,” but it was too late.
On November 8, he announced that he had reached an agreement with Zhao to sell him his empire. But the next day, Zhao backed down and walked out of the deal because FTX and Alameda’s financial situation was more precarious than expected.
Bankman-Fried tried to find another savior, but ended up filing for Chapter 11 bankruptcy on Nov. 11. He resigned and was replaced by John Ray, the liquidator of energy broker Enron.
Since then, there have been startling revelations about the Bankman-Fried regime, piling up from Ray, and in particular from regulators who are trying to determine what caused the failure of FTX – which was still valued at $32 billion as of February dollars — — in a few days.
On Dec. 13, US regulators – the Justice Department, the SEC and the Commodity Futures Trading Commission or CFTC – filed a series of criminal and civil charges against the former trader.
Justice Department prosecutors have filed eight counts of charges against Bankman-Fried, according to the indictment opened Dec. 13. Four of the charges, including conspiracy to commit wire fraud on customers and lenders and wire fraud, indicate that the alleged acts began as early as 2019. This is the founding year of FTX.
“Bankman-Fried was orchestrating a massive, years-long fraud by diverting billions of dollars of trading platform customer funds for his own personal benefit and to help grow his crypto empire,” the SEC says in its civil complaint.