Cryptocurrency entrepreneur Sam Bankman-Fried walked out of a Manhattan courthouse Thursday with his parents after they agreed to sign a $250 million bond and keep him at their California home while he awaits trial on charges that he swindled investors and looted customer deposits on his FTX trading platform.
The $250 million bond is believed to be the largest federal pretrial bond ever, said assistant U.S. attorney Nicolas Roos.
Roos said in U.S. District Court that Bankman-Fried, 30, “perpetrated a fraud of epic proportions.”
Bankman-Fried’s bail conditions are strict. He has already surrendered his passport and won’t be allowed travel documents, the court said. He cannot own firearms, open any lines of credit or start new businesses, and must seek government approval for any transactions over $1,000.
Bankman-Fried’s parents, both law professors, put their home’s equity as collateral for the bond. Bankman-Fried will be permitted to leave the Palo Alto home only for exercise or legal proceedings, the court said. The court also mandated that Bankman-Fried undergo mental health and substance abuse treatment. The entrepreneur was required to get an electronic monitoring bracelet before leaving the courthouse.
Fraud or error?
Prosecutors agreed to bail because Bankman-Fried did not fight extradition, saving the govenment from a potentially yearslong, drawn-out process, Roos said.
Reunited with his parents and lawyers inside the courthouse, an apparently silent Bankman-Fried shook the hands of a supporter before heading out the door, where photographers and video crews rushed him as he got into a car and left.
Bankman-Fried wore a suit and tie in court and sat between his attorneys. Two U.S. marshals sat behind him. Near the end of the hearing, 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.
His first U.S. court appearance comes after the onetime crypto wunderkind was flown from the Bahamas to the U.S. on Wednesday. Bankman-Fried was arrested earlier this month on charges of wire fraud, conspiracy, money laundering and other financial crimes.
While he was in the air Wednesday, the U.S. attorney in Manhattan announced that two of Bankman-Fried’s closest business associates had also been charged and had secretly agreed to plea deals.
Caroline Ellison, 28, the former chief executive of Bankman-Fried’s trading firm, Alameda Research, and Gary Wang, 29, who co-founded FTX, pleaded guilty to charges including wire fraud, securities fraud and commodities fraud.
U.S. Attorney Damian Williams said in a video statement that both were cooperating with investigators and had agreed to assist in any prosecution. He warned others who enabled the alleged fraud 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.”
Possibility of decades in prison
Prosecutors and regulators contend that Bankman-Fried was at the center of several illegal schemes to use customer and investor money for personal gain. He faces the possibility of decades in prison if convicted on all counts.
In a series of interviews before his arrest, Bankman-Fried said he made mistakes running FTX and Alameda but that he never intended to defraud anyone.
Bankman-Fried is charged with using money, illicitly taken from FTX customers, to enable trades at Alameda, spend lavishly on real estate, and make millions of dollars in campaign contributions to U.S. politicians.
FTX, founded in 2019, rode the crypto investing phenomenon to great heights quickly, becoming one of the world’s largest exchanges for digital currency. Seeking customers beyond the tech world, it hired the comic actor and writer Larry David to appear in a TV ad that ran during the Super Bowl, hyping crypto as the next big thing.
Bankman-Fried’s crypto empire, however, abruptly collapsed in early November when customers pulled deposits en masse amid reports questioning some of its financial arrangements.
CBS News’ Lilia Luciano contributed reporting.