Bankman-Fried to be released on $250 million bond to live with parents


NEW YORK — Disgraced former cryptocurrency mogul Sam Bankman-Fried was granted release from law enforcement custody on Thursday after agreeing in his first U.S. court appearance to post a $250 million bond and remain confined to his parents’ home in Palo Alto, Calif.

The former chief executive of collapsed crypto exchange FTX is due back in Manhattan federal court on Jan. 3, where he may be asked to enter a plea to the eight criminal counts he is facing. Bankman-Fried declined to comment after the proceedings, as did his lawyers and parents, Joe Bankman and Susan Fried, both of whom are prominent professors at Stanford Law School.

The 30-year-old, clad in a charcoal suit and sporting stubble along with his trademark unkempt hair, came into the courtroom in leg shackles, as his parents looked on from the third row. He only spoke a few words during the hearing. When asked by the judge if he understood that if he broke any of the terms of his release, his parents will forfeit $250 million and he would be charged with bail jumping, he said, “Yes, I do.”

Bankman-Fried is accused of perpetrating one of the biggest financial frauds in American history. Federal prosecutors last week charged him with multiple crimes, including fraud, conspiracy, money laundering and campaign finance violations. They allege he defrauded investors and diverted billions of dollars in FTX customer money to his hedge fund, which he then tapped for huge real estate purchases, risky investments and political donations.

The Securities Exchange Commission and the Commodity Futures Trading Commission have also brought civil charges against Bankman-Fried, alleging he orchestrated a years-long scheme to siphon off FTX customer funds he pledged to safeguard for personal use instead.

Bankman-Fried was taken into U.S. custody on Wednesday and flown to New York under FBI supervision after waiving his rights to formal extradition from the Bahamas, which had been his home-base. Bahamian authorities arrested the former multibillionaire last Monday at his luxury condo in Nassau, and he spent the next nine nights in the island nation’s only prison.

Bankman-Fried’s appearance comes as two of his closest former colleagues pleaded guilty to criminal fraud charges. The two associates — Caroline Ellison, the former chief executive of Alameda Research, Bankman-Fried’s hedge fund, and Gary Wang, co-founder of FTX and its former chief technology officer — are cooperating with federal prosecutors, a development that spells deepening legal peril for Bankman-Fried.

“We continue to work around-the-clock and we are far from done,” Manhattan U.S. Attorney Damian Williams said in a prerecorded video message announcing the pleas Wednesday evening.

Ellison, who was at times romantically linked to Bankman-Fried, pleaded guilty to seven counts that mirror a significant portion of Bankman-Fried’s indictment. Her charges include conspiracies to commit wire fraud, securities fraud, commodities fraud and money laundering. She faces up to 110 years in prison. Wang pleaded guilty to four conspiracy and fraud-related counts. He faces up to 50 years in prison.

Williams, in his video message, encouraged other FTX insiders to come forward. “If you participated in misconduct at FTX or Alameda, now is the time to get ahead of it,” he said. “We are moving quickly and our patience is not eternal.”

Bankman-Fried’s court appearance offered another compelling scene in a downfall that has unfolded even faster than his meteoric rise. Until months ago, he was one of the youngest self-made billionaires in the world, with an estimated $16 billion personal fortune. In the wake of FTX’s collapse, Bankman-Fried has said he is down to about $100,000 and one working credit card.

The roughly $40 million he spent on political donations helped him forge ties to a key financial regulator and opened doors to committee chairmen and leaders on Capitol Hill. That money has since become an albatross for those who received it and now face questions about how they intend to pay it back.

Bankman-Fried’s effort to pitch cryptocurrency as a mainstream tool for everyday investors to build wealth — a campaign backed by hundreds of millions of dollars in marketing by FTX — has similarly boomeranged. The value of the global crypto market has shed roughly a quarter of its value, or about $250 billion, since the company imploded last month, according to data from CoinMarketCap. And its failure is continuing to reverberate through the crypto economy, with other companies that had exposure to FTX filing for bankruptcy or teetering.

Newmyer reported from Washington.

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