Sam Bankman-Fried freed on $250M US bail as former execs co-operate in case against him

Sam Bankman-Fried will be released on a $250 million US bond package while he awaits trial on fraud charges related to the collapse of the FTX crypto exchange, a federal magistrate judge said on Thursday.

Caroline Ellison and Gary Wang pleaded guilty to wire fraud, securities fraud and commodities fraud

Sam Bankman-Fried
Sam Bankman-Fried was released on a $250 million US bail package after making his first U.S. court appearance to face fraud charges over the collapse of FTX, the cryptocurrency exchange he co-founded. (Stephanie Keith/Bloomberg)

Sam Bankman-Fried will be released to his parents' home while he awaits his trial on fraud charges after agreeing to a record-setting $250 million US bail.

Bankman-Fried has been accused of stealing billions of dollars in FTX customer funds to hide and offset losses at his hedge fund, Alameda Research, prior to the bankruptcy of both companies and others last month.

Bankman-Fried, 30, built his crypto empire in the Bahamas, where he has been living since his companies collapsed in November. But events moved swiftly this week after he was arrested by Bahamanian authorities, and then extradited to New York on Wednesday evening.

Bankman-Fried's defence lawyer, Mark Cohen, argued that his client was happy to abide by any conditions if he is released prior to his trial.

"My client remained where he was, he made no effort to flee," Cohen said in a New York court room on Thursday.

Wearing a grey suit and leg restraints, Bankman-Fried sat flanked by his lawyers and nodded when the judge informed him that if he fails to appear in court, a warrant would be issued for his arrest.

The bail package required Bankman-Fried to surrender his passport and remain in home confinement at his parents' home in Palo Alto, Calif. He would also be required to undergo regular mental health treatment and evaluation.

His parents — both Stanford Law School professors — co-signed the bond and posted the equity in their home as assurance for Bankman-Fried's return to court. 

WATCH | 2 former FTX execs take plea deal, will co-operate: 

U.S. Attorney announces guilty pleas related to crypto trading platform FTX

3 months ago
Duration 1:54
Manhattan U.S. Attorney Damian Williams says two former associates of FTX founder Sam Bankman-Fried have pleaded guilty to fraud charges and are cooperating with the government.

Though he has acknowledged he made mistakes, in a series of media interviews Bankman-Fried has pushed back on the notion that he did anything illegal or to benefit himself. After peaking at more than $25 billion earlier this year, Bankman-Fried says his personal net worth currently consists of about $100,000.

Prosecutor Nicolas Roos called the package the "largest ever pretrial bond."

Magistrate Judge Gabriel W. Gorenstein asked Bankman-Fried whether he understood he would face arrest and owe $250 million if he chose to flee.

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

Others have agreed to co-operate

Two other executives at FTX, Caroline Ellison and Gary Wang, plead guilty to fraud charges earlier this week but are said to be co-operating with investigators in exchange for a more lenient sentence.

The 28-year-old Ellison was CEO of Alameda Research, while the 29-year-old Wang was a co-founder of FTX.

"They are both co-operating with the Southern District of New York," U.S. Attorney Damian Williams said Wednesday night in a video statement released on social media.

Prior to Bankman-Fried's extradition on Wednesday, neither Wang nor Ellison had said anything publicly and prosecutors had not indicated they were facing potential criminal charges or that they had pledged to work with investigators. It was unclear whether Bankman-Fried, who has apologized for FTX's collapse but denied defrauding anyone, was also in the dark that his former co-executives were co-operating.

He added that anyone else who participated in the fraud should reach out to his office because "our patience is not eternal" and further criminal charges against others were possible.

A white jet is seen on a runway at night with a green hangar in the background.
A plane taxis toward the runway in Nassau, Bahamas, with Bankman-Fried on board as he was extradited to the United States. Bahamian authorities arrested Bankman-Fried last week at the request of the U.S. government. (Joe Raedle/Getty Images)

Ellison and Wang signed plea agreements on Dec. 19, partially in exchange for a promise that prosecutors would recommend a reduction in their sentences if they co-operate fully in the investigation.

Without such a deal, Ellison, who also faces a money laundering conspiracy charge, could face up to 110 years in prison. Wang could get up to 50 years.

Released on bail

Both were released on $250,000 US bail after their secret court appearances with travel restricted to the continental United States.

"Gary has accepted responsibility for his actions and takes seriously his obligations as a co-operating witness," said Wang's lawyer, Ilan Graff.

A lawyer for Ellison did not immediately return messages seeking comment.

Wang created the software code that allowed Alameda to divert FTX customer funds. Ellison then used the misappropriated funds for Alameda's trading activity, the SEC said.

The 30-year-old Bankman-Fried could potentially spend the rest of his life in jail.

With files from Reuters

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