US Judge Frees Cryptocurrency Tycoon on $250 Million Bail

First modification: 12/23/2022 – 11:05

Sam Bankman-Fried, the former head of cryptocurrency exchange FTX, was released Thursday on $250 million bail, pending trial on fraud and conspiracy charges.

Judge Gabriel Gorenstein issued the ruling during the arraignment hearing against Bankman-Fried in Manhattan federal court following his extradition from the Bahamas.

eight charges

Bankman-Fried, who recently claimed he only had $100,000 left in the bank, will have to live at his parents’ home in Palo Alto, California, the judge ruled. Under the agreement, the 30-year-old former billionaire will be subject to electronic monitoring.

FTX and its sister trading house Alameda Research went bankrupt last month, winding up a virtual trading business that had at one point been valued by the market at $32 billion.

Prosecutors allege that Bankman-Fried misled investors and misused funds belonging to clients of FTX and Alameda Research. The businessman was charged with eight counts, including conspiracy, wire fraud, money laundering and violations of the electoral financing law.

He is accused of misappropriating funds deposited by his clients with FTX, amounting to nearly $2 billion since the cryptocurrency exchange platform was founded in 2019, according to the SEC (Security Exchange Commission), the financial watchdog. from USA.

With this money, he would have carried out risky transactions through another company he owned, Alameda. He reportedly invested in real estate in the Bahamas and gave money to Democratic politicians, including Joe Biden.

partners involved

Bankman-Fried was flown to New York by US law enforcement authorities late Wednesday, where prosecutors said two of his associates had pleaded guilty to charges related to the company’s collapse. They could both be collaborating with the government, which means they could frame Sam Bankman-Fried.

They are Caroline Ellison, former head of Alameda Research; and Gary Wang, co-founder of FTX, charged “in connection with her role in the fraud that contributed to the collapse” of the platform, Manhattan US Attorney Damian Williams said, without elaborating.

Separately, the US stock market regulator, the SEC, and the Commodity Futures Trading Commission (CFTC) announced Wednesday that they had filed civil lawsuits against Ellison and Wang and that the two were cooperating, which should lead to lighter penalties.

Extradited from the Bahamas

After its founding in 2019, FTX grew spectacularly to become a leading player in the world of cryptocurrencies. Bankman-Fried graced the covers of finance and technology magazines, attracting large investments from prominent fund managers and venture capitalists.

But it all came crashing down dramatically in November when a disclosure revealed that Alameda’s balance sheet was largely based on an FTX-created token with no standalone value, and exposed that the Bankman-Fried companies were interlinked.

The businessman was arrested at his Nassau apartment on December 12 at the request of the United States. A permanent resident of the Bahamas, he spent nine days in jail, weighing his options before telling the Nassau magistrate court that he would not fight extradition.

The CFTC estimates that $8 billion in funds were embezzled from FTX client accounts.