Sam Bankman-Fried, the 30-year-old founder and former CEO of collapsed crypto exchange FTX, was released on a $250 million bail package after appearing in a Manhattan federal courtroom 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 defrauding customers, money laundering, and violating campaign finance laws but was not asked to enter a plea 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 customers by moving their funds into Alameda Research, a private crypto fund he controlled. In addition, according to the Department of Justice, Bankman-Fried had broken campaign finance laws by funneling political donations through other people.
Last month, after it was revealed that customer deposits to FTX were mixed in with Alameda, customers began withdrawing money from the exchange. As a result, FTX went into bankruptcy on Nov. 11. Bankman-Fried stepped down 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 Dec. 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 cofounder Gary Wang, 29, and former Alameda co-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 reportedly had 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 statement said that the two were involved “in a multiyear scheme to defraud equity investors in FTX.”
According to the SEC complaint, Bankman-Fried ordered the company’s developers to write code that would allow Alameda to extract money secretly from FTX customers. And through the summer, while Bankman-Fried knew the company was at risk of collapse, he allegedly continued to extract client cash and even made loans to himself.
Bankman-Fried also is facing civil complaints from the SEC and the CFTC, which seek to bar him as a company director and force him to pay reparations to his clients, plus additional fines.
Sunil Kavuri, a British customer of FTX who said he lost $2.1 million, told BuzzFeed News that he was pleased with how things were playing out. “The last six weeks have been difficult for many victims,” he said. “I am actually pleasantly surprised at the speed that they have all been charged.” He said he hoped that the cooperation of Wang and Ellison would help get customers their money back.