Sam Bankman-Fried was released with a $250 million bond package while he awaits trial on fraud allegations related to the collapse of the FTX cryptocurrency exchange.
Federal prosecutors in Manhattan have accused him of stealing billions of dollars in FTX client funds to make up for the losses of his hedge fund Alameda Research.
Bankman-Fried was not asked to make a plea on Thursday. He has acknowledged the failure of risk management at FTX before, but said he does not believe he is criminally responsible. His defense attorney Mark Cohen declined to comment after the hearing in Manhattan federal court.
Nicolas Roos, a district attorney, told U.S. Magistrate Judge Gabriel Gorenstein that the bail package meant Bankman-Fried would have to surrender his passport and stay home at his parents’ home in Palo Alto, California. He would also need to undergo regular mental health treatment and examination.
Roos described the package as the “largest interim bond of all time.”
Bankman-Fried, 30, was arrested on December 13 in the Bahamas, where he lived and where FTX is based, cementing the one-time billionaire’s fall from grace. He left the Caribbean nation in FBI custody on Wednesday evening.
Cohen said he agreed with the bail terms proposed by prosecutors. He noted that his parents — both Stanford Law School professors — would co-sign the bond and deposit the equity in their home to secure Bankman-Fried’s return to court.
“My client stayed where he was, he didn’t make an effort to escape,” Cohen said.
Bankman-Fried was wearing a gray suit and leg braces. He sat flanked by his lawyers and nodded as the judge told him that an arrest warrant would be issued against him if he did not appear in court.
He only spoke when Gorenstein asked him whether he understood the terms of his release and that he could be charged with another crime if he did not appear in court.
“Yes, I do,” Bankman-Fried answered.
Gorenstein set Bankman-Fried’s next court date for January 3, 2023, before U.S. District Judge Ronny Abrams, who will hear the case.
“I’m going to need strict pre-trial supervision,” Gorenstein said. The conditions included electronic monitoring and a ban on opening new credit lines or companies.
He said Bankman-Fried had “gained so much notoriety that it would be impossible for him” to hide without being recognized or to participate in further financial plans.
“Fraud of epic proportions”
Bankman-Fried founded FTX in 2019, and a boom in the values of Bitcoin and other digital assets drove the stock market to a valuation of around $32 billion earlier this year. This made the Massachusetts Institute of Technology (MIT) graduate several times a billionaire and an influential donor to political campaigns in the USA.
However, concerns about the merger of funds between FTX and Alameda led to a flood of customer withdrawals in early November, which ultimately forced the exchange to file for bankruptcy on November 11. Bankman-Fried later said at a New York Times conference that he only had $100,000 in his bank account.
Roos said that although Bankman-Fried committed a “fraud of epic proportions,” he had no escape story and that his financial wealth had significantly reduced.
He said that the evidence in court would consist of statements from “several cooperating witnesses” as well as thousands of pages of written communications.
Just a few hours after Bankman-Fried’s plane took off from the Bahamas, Damian Williams, the top federal prosecutor in Manhattan, announced that two of Bankman-Fried’s closest aides — former Alameda CEO Caroline Ellison and FTX co-founder Gary Wang — have pleaded guilty and are cooperating with prosecutors.
Williams has described the investigation as ongoing and called on other people with knowledge of misconduct at FTX and Alameda to come forward.