Friday, December 23, 2022

Sam Bankman-Fried of FTX was released on a $250 million bond after being accused of a "epic" fraud

FTX's Sam Bankman-Fried, charged with 'epic' fraud, released on $250 million bond

 In New York: While he awaits trial for the "fraud of epic proportions" that led to the collapse of the FTX crypto exchange, Sam Bankman-Fried was granted bail of $250 million on Thursday.

The founder of FTX has been accused by federal prosecutors in Manhattan of stealing billions of dollars from customer funds to cover losses at his hedge fund, Alameda Research.

On Thursday, Bankman-Fried was not asked to enter a plea. He has previously acknowledged FTX's failures in risk management, but he has stated that he does not believe he is criminally liable. Mark Cohen, his attorney, declined to comment following the hearing in the federal court in Manhattan.

Bankman-Fried's next court date has been set for January 3, 2023, by US Magistrate Judge Gabriel Gorenstein. The case will be handled by US District Judge Ronny Abrams.

In 2019, Bankman-Fried established FTX. The exchange reached a valuation of approximately $32 billion earlier this year as a result of a surge in the value of bitcoin and other digital assets. This made the graduate of Massachusetts Institute of Technology (MIT) not only an influential donor to US political campaigns but also a multi-billionaire.

Gorenstein said that Bankman-Fried had "achieved sufficient notoriety that it would be impossible" for him to engage in further financial schemes or hide from detection when granting him pre-trial release.

The former billionaire, who appeared in court on Thursday, was followed out of the lower Manhattan courthouse and into a black SUV by a group of photographers. In contrast to the shorts and T-shirt he became famous for wearing when running FTX, he wore facial stubble and a gray suit.

Prosecutor Nicolas Roos informed Gorenstein that Bankman-Fried would have to surrender his passport as part of the bail package and remain in home confinement at his parents' Palo Alto, California, residence. He would also need to be evaluated and treated for his mental health on a regular basis.

Although Bankman-Fried had committed a "fraud of epic proportions," according to Roos, he did not have a history of fleeing and his financial assets had significantly diminished.

The arrest of Bankman-Fried, 30, last week in the Bahamas, where he lived and FTX is based, paves the way for his downfall. He was detained by the FBI when he left the Caribbean nation on Wednesday night.

Cohen stated that he concurred with the conditions that prosecutors proposed for bail. He mentioned that Bankman-Fried's parents, who are both professors at Stanford Law School, would co-sign the bond and put the equity in their home up for his return to court as an assurance. At the hearing, both were present.

Cohen stated, "My client remained where he was, he made no effort to flee."

The bond is intended to guarantee that the family's assets, including their Palo Alto home, could be confiscated by the government up to $250 million in the event that Bankman-Fried escapes. Reuters was unable to ascertain the family's total wealth.

Bankman-Seared said at a New York Times gathering on November 30, following the trade's breakdown, that he had $100,000 in his financial balance.

"SUFFICIENT NOTORIETY" Bankman-Fried sat flanked by his lawyers in leg restraints and nodded when the judge informed him that he would be arrested if he did not appear in court. Gorenstein stated that additional conditions included a prohibition on opening new businesses or lines of credit and electronic monitoring through a device that had to be fitted before he left the court.

He only spoke when Gorenstein asked him if he understood the terms of his release and that he might face additional charges if he didn't show up for court.

Bankman-Fried replied, "Yes, I do."

However, early November saw a flurry of customer withdrawals as a result of concerns about FTX and Alameda merging funds, which ultimately forced the exchange to declare bankruptcy on November 11.

According to Roos, the testimony of "multiple cooperating witnesses" and thousands of pages of written communications would be used as evidence at the trial.

The top federal prosecutor in Manhattan, Damian Williams, announced that two of Bankman-Fried's closest associates, former Alameda CEO Caroline Ellison and FTX co-founder Gary Wang, had pleaded guilty and were cooperating with prosecutors just hours after Bankman-Fried's plane from the Bahamas took off.

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