Sam Bankman-Fried, the 30-year-old founder and former CEO of collapsed crypto exchange FTX, was released on $250 million bail after appearing in Manhattan federal court this afternoon. Under the terms of the package, he will be confined to his parents’ home in Palo Alto, California, while he awaits trial. Bankman-Fried has been charged with eight counts of customer fraud, money laundering and violation of campaign finance laws, but was not asked to plead guilty during his court appearance.
A grand jury indictment, unsealed last week, accused Bankman-Fried, also known as SBF, of “knowingly” devising a scheme to defraud clients by moving their funds to Alameda Research, a private crypto fund he controlled. In addition, according to the Justice Department, Bankman-Fried had violated campaign finance laws by funneling political donations through other people.
Last month, after it was revealed that client deposits on FTX were mixed with Alameda, clients began withdrawing money from the exchange. As a result, FTX filed for bankruptcy on November 11. Bankman-Fried resigned as CEO of the company that same day. His wealth plummeted from an estimated $16 billion to virtually nothing.
Bankman-Fried was arrested in the Bahamas on December 12 at the request of US authorities. Last night, after agreeing to extradition, he was flown to New York.
Also last night, US Attorney Damian Williams Announced that two of Bankman-Fried’s top executives, FTX co-founder Gary Wang, 29, and former Alameda CEO Caroline Ellison, 28, had pleaded guilty to federal criminal fraud charges and were cooperating with the prosecution against Bankman-Fried. Wang and Ellison had shared a mansion with Bankman-Fried in the Bahamas, and Ellison and Bankman-Fried had reportedly been romantically involved.
In addition, the Securities and Exchange Commission and the Commodity Futures Trading Commission, which oversees derivatives markets, filed civil fraud charges against Wang and Ellison. The SEC in a declaration it said the two were involved “in a multi-year scheme to defraud equity investors in FTX.”
According to the SEC complain, Bankman-Fried ordered the company’s developers to write code that would allow Alameda to secretly extract money from FTX clients. And over the summer, while Bankman-Fried knew the company was at risk of collapse, he allegedly continued to extract cash from customers and even made loans to himself.
Bankman-Fried is also facing civil lawsuits from the SEC and CFTC, which seek to ban him as a director of the company and force him to pay reparations to his clients, in addition to additional fines.
Sunil Kavuri, a British FTX client who said he lost $2.1 million, told BuzzFeed News he was pleased with how things were playing out. “The last six weeks have been difficult for many victims,” he said. “In fact, I am pleasantly surprised by the speed at which they have all loaded.” He said he hoped Wang and Ellison’s cooperation would help clients get their money back.
