Accused crypto crook Sam Bankman-Fried was released from custody Thursday on a $250 million bond, following the FTX founder’s first appearance in a U.S, court on fraud charges.
Bankman-Fried walked out of the federal courthouse in lower Manhattan with his parents by his side, through a phalanx of reporters and into a waiting car in which he then drove away.
Federal Magistrate Judge Gabriel Gorenstein agreed to allow Bankman-Fried to walk free after his parents signed a bond pledging their Palo Alto, Calif. home as security.
The bail agreement requires Bankman-Fried to remain in home detention at his parents’ home and wear an electronic monitoring device. He also had to surrender his passport.
The hearing capped a whirlwind 10 days for Bankman-Fried, who was returned to the U.S. late Wednesday after being extradited from the Bahamas where he’d been held since his arrest on Dec. 13.
While he was mid-air, prosecutors in New York dropped a bombshell, announcing that two of Bankman-Fried’s top associates, Caroline Ellison and Gary Wang, had pleaded guilty in the case and had agreed to cooperate with authorities.
Bankman-Fried’s arrest came just over a month after the implosion of his crypto currency exchange FTX, which caused billions of dollars in customer deposits to vanish. The firm filed for bankruptcy on Nov. 11 when Bankman-Fried was ousted from the company he’d co-founded in 2019.
Prosecutors say the company was a fraud from the very beginning, with Bankman-Fried allegedly funneling customer deposits into the accounts of his quantitative trading firm, Alameda Research. Bankman-Fried treated the money as his personal piggy bank, prosecutors have said, using it to back risky bets and to finance the lavish lifestyle for him and a small cohort of executives.
Prosecutors have left the door open for other company executives to come forward and present evidence against Bankman-Fried.
“If you participated in misconduct at FTX or Alameda, now is the time to get ahead of it,” said Damian Williams, the U.S. attorney for the southern district of New York. “We are moving quickly, and our patience is not eternal.”
Ellison, the former chief executive of Alameda, and Wang, who co-founded FTX, have admitted to being in on the fraud and taking steps at Bankman-Fried’s behest to create backdoors in FTX’s systems that allowed Alameda unlimited access to FTX customer money and prop up FTX’s self-issued coin, FTT.
Regulators say the effort to prop up the price of FTT allowed Alameda to secure billions in outside margin loans that were based on the inflated price of the coin.
While Alameda had been raiding customer deposits from the beginning, prosecutors said, the effort accelerated after Alameda was faced with margin calls from its lenders starting in the summer.
The company came fully unwound in November, when its competitor, Binance, announced it was unloading $500 million in FTT coin due to “recent revelations that have come to light” about the company’s books. That triggered mass redemptions by depositors, which FTX could not meet.
After freezing withdrawals, Bankman-Fried revealed that the company had an $8 billion hole in its books. Bankruptcy administrators have said they have struggled to recover substantial assets from FTX as the company under Bankman-Fried, had unreliable bookkeeping and maintained few controls.
