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Sam Bankman-Fried has been released on $250 million bail after making his first US court appearance to face fraud charges in connection with the collapse of FTX, the cryptocurrency exchange he co-founded.
Shackled and wearing a blue suit, Bankman-Fried appeared before a magistrate on Thursday for a bail hearing in Manhattan federal court. He did not enter a plea, which will take place later in front of the judge presiding over his case.
The bail package includes a $250 million personal guarantee secured by his parents’ house in California. His conditions require him to stay with them and submit to electronic monitoring.
U.S. Magistrate Judge Gabriel Gorenstein said the risk of Bankman-Fried fleeing was low and said he did not pose a danger to the public in terms of future financial crimes.
Bankman-Fried, 30, was accused in an indictment unsealed Dec. 13 by federal prosecutors in Manhattan of orchestrating a years-long fraud in which he used billions of dollars in FTX client funds for personal expenses and high-risk bets through the exchange’s subsidiary trading house , Alameda Research.
FTX’s collapse reverberated through the already troubled cryptocurrency industry, prompting calls for further regulation as well as accountability for those who ran the exchange. It was a stunning setback for Bankman-Fried, a leading figure in an industry once valued at more than $25 billion that has become a major political donor.
In numerous media interviews since FTX filed for bankruptcy in November, Bankman-Fried has tried to argue that the stock market’s collapse was due to management mistakes rather than deliberate fraud.
That defense may be harder to maintain after Manhattan U.S. Attorney Damien Williams announced Wednesday night that two of Bankman-Fried’s closest associates, former Alameda CEO Caroline Ellison and the former chief technology officer of FTX Gary Wang, have pleaded guilty to wire fraud and cooperated with prosecutors.
Bankman-Fried’s appearance in a New York court ends a week-long drama surrounding his return to the US to stand trial. Arrested Dec. 12 in the Bahamas at the request of U.S. authorities, he initially indicated he would fight extradition.
After being denied bail in Nassau and sent to the notorious Fox Hill prison, Bankman-Fried changed his mind. But his return to the US was delayed amid confusion in the Bahamas Magistrate’s Court until he finally left the island on a chartered flight from the US government on Wednesday night.
Williams announced Ellison and Wang’s pleas while Bankman-Fried was in the air.
Ellison pleaded guilty to seven felonies, including wire fraud and conspiracy to commit money laundering, in a plea agreement she signed on Dec. 19. Wang pleaded guilty to four charges. They face decades in prison on these charges, but will almost certainly receive leniency recommendations from the government based on their cooperation.
Legal experts said the money transferred to Alameda was very difficult to explain away as mismanagement rather than fraud, and testimony from his former associates could be devastating to Bankman-Fried. Faced with such witnesses, defendants in other cases have tried to turn the tables and portray them as the real bad actors.
Bankman-Fried may try to cut a deal himself, but he may not get much leniency since he’s likely at the top of the prosecution’s target list. In the meantime, more cooperators may emerge. Williams issued a warning to potential witnesses in a statement Wednesday night.
“If you have engaged in misconduct at FTX or Alameda, now is the time to get ahead of it,” Williams said. “We move fast and our patience doesn’t last forever.”
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