• Former FTX CEO Sam Bankman-Fried appeared in U.S. federal court in New York on Thursday on charges of fraud, money laundering and campaign-finance violations.
• The judge set bail at $250 million, secured by equity in his parents’ Palo Alto home, and a list of requirements for Bankman-Fried to remain free while he faces charges.
• Caroline Ellison, the former CEO of FTX’s sister company Alameda Research, and Gary Wang, the other co-founder of FTX, pleaded guilty to federal charges and also admitted guilt in securities violations.
Sam Bankman-Fried, the former CEO of FTX, a Bahamas-based crypto exchange, appeared in U.S. federal court in New York on Thursday to face felony charges including fraud, money laundering and campaign-finance violations. The case in the U.S. District Court for the Southern District of New York centers on accusations of fraud, money laundering and campaign-finance violations. Bankman-Fried was brought to the U.S. overnight by the Federal Bureau of Investigation after his extradition from the Bahamas was cleared on Wednesday.
The judge set bail at $250 million, secured by equity in his parents’ Palo Alto, California, home, and a list of requirements were included for Bankman-Fried to remain free while he faces charges. These included not being allowed to make financial transactions for more than $1,000, not opening new lines of credit, not leaving the house except to exercise, and going through substance-abuse and mental-health treatment. Bankman-Fried agreed to the conditions of release, and was then instructed to answer aloud, to which he said, “Yes, I do.”
Prosecutors have been closing in on the disgraced crypto frontman in recent weeks, inking plea deals inside the FTX inner circle. Caroline Ellison, the former CEO of FTX’s sister company Alameda Research, and Gary Wang, the other co-founder of FTX, both pleaded guilty to federal charges and also admitted guilt in securities violations, according to statements from U.S. prosecutors and regulators late Wednesday.
The cooperation of Ellison and Wang – who admitted playing active roles in the company’s fraud – is likely to be key in the case against Bankman-Fried. They’ve both admitted that the senior management was aware of lawbreaking in the movement of customer funds between the two firms. Ellison’s recently unsealed plea agreement says that as long as she’s helping the SDNY’s investigation, as well as any other law enforcement agency involved in the case, she won’t face further criminal prosecution apart from potential tax violations. Her bail was set at $250,000, and she has to forfeit her travel documents.
Ellison and Wang also settled enforcement actions with the U.S. Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC). In the SEC case, it listed FTT, the exchange’s native token, as a security – another shot across the bow in the industry’s standoff with the securities regulator.
Judge Gabriel Gorenstein argued that the monitoring device “would go very far to provide assurance” that Bankman-Fried would stay put and that his fame would make it difficult for him to flee into hiding. Also, because his crimes were financial, the federal magistrate judge said it’s unlikely he’s a threat to anybody, made especially certain by his inability to move money or start a business now.
Bankman-Fried has already given up his passport, and he’ll be fitted with a tracking device. His parents have to secure the bail with their home-equity arrangement by Jan. 12. SEC Chair Gary Gensler said in a Wednesday night statement, “Caroline Ellison and Sam Bankman-Fried schemed to manipulate the price of FTT, an exchange crypto security token that was integral to FTX, to prop up the value of their house of cards. Until crypto platforms comply with time-tested securities laws, risks to investors will persist.”