FTX founder Bankman-Fried released on $250 million bond at U.S. court appearance

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NEW YORK (Reuters) – Sam Bankman-Fried has been released on a $250 million bond package pending trial on fraud charges related to the collapse of crypto exchange FTX.

Federal prosecutors in Manhattan have accused him of stealing billions of dollars in FTX client funds to cover losses at his hedge fund, Alameda Research.

Bankman-Fried was not asked to file a petition on Thursday. He previously admitted to failing to manage risk at FTX, but believes he has no criminal liability. Rejected.

Prosecutor Nicholas Roos told U.S. Magistrate Gabriel Gollenstein that the bail package would require Bankman-Fried to surrender his passport and remain confined to his parents’ home in Palo Alto, California. He should also undergo regular mental health treatment and evaluation.

Roos called the package “the biggest pre-trial bond ever.”

Bankman-Fried, 30, was arrested last week in the Bahamas, where he lives and is home to FTX, confirming the former billionaire’s downfall. He left the Caribbean on Wednesday night while in FBI custody.

Cohen said he agreed to the bail terms proposed by prosecutors. He said his parents, both Stanford Law School professors, co-signed the bond and posted his shares to his home as a guarantee that Bankman-Fried would return to court.

“My client stayed where he was and didn’t try to run away,” Cohen said.

Dressed in a gray suit and leg restraints, Bankman-Fried sat surrounded by lawyers and nodded as he told them the judge would issue an arrest warrant if he didn’t appear in court.

He only spoke when asked by Gollenstein if he understood the terms of his release and if he could face additional charges if he did not appear in court.

“Yes, yes,” Bankman-Fried replied.

Gorenstein set Bankman-Fried’s next court date for January 3, 2023, before Ronny Abrams, the U.S. District Judge in charge of the case.

“We intend to demand strict pretrial supervision,” Gollenstein said, adding conditions such as electronic surveillance and a ban on starting new lines of credit or businesses.

He said Bankman-Fried had “achieved enough notoriety” that it was impossible for him to hide unrecognized or become involved in further financial schemes.

“Deception of Magnificent Proportions”

Bankman-Fried founded FTX in 2019. The soaring value of Bitcoin and other digital assets pushed the exchange’s valuation to nearly $32 billion earlier this year, and Massachusetts Institute of Technology (MIT) graduated from billionaire status multiple times. . He is also an influential donor to US political campaigns.

However, concerns over mixed funds between FTX and Alameda prompted a spate of customer withdrawals in early November, ultimately forcing the exchange to declare bankruptcy on November 11. his bank account.

Roos said Bankman-Fried had carried out a “magnificent fraud” but had no escape history and his financial assets had been significantly reduced.

He said the evidence at the trial consisted of testimony from “multiple cooperating witnesses” and thousands of pages of written correspondence.

Just hours after Bankman-Fried’s plane took off from the Bahamas, Manhattan’s top federal prosecutor Damien Williams announced that two of Bankman-Fried’s closest colleagues, former Alameda CEO Caroline Ellison and FTX co-founder Gary Wang pleaded guilty and were cooperating with the prosecution.

Williams explained that an investigation was ongoing and urged others with knowledge of the cheating at FTX and Alameda to come forward.

Reported by Luc Cohen, New York. Edited by Sam Holmes, Nick Zieminski, Noeleen Walder, Daniel Wallis

Our standards: Thomson Reuters Trust Principles.

Luc Cohen

thomson Reuters

New York Federal Court Report. Previously worked as a correspondent in Venezuela and Argentina.

Jody Godoy

thomson Reuters

Jody Godoy reports on banking and securities law. You can contact her at [email protected].

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