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FTX founder Sam Bankman-Fried released on $250 million bond

The former CEO of failed crypto firm FTX Sam Bankman-Fried made his first appearance in a U.S. court on Thursday following his extradition from the Bahamas.

MANHATTAN (CN) — A New York federal judge set bail for Sam Bankman-Fried on Thursday, one week after the founder of the crypto exchange FTX was indicted on criminal fraud and conspiracy charges.

The $250 million package allows the 30-year-old Bankman-Fried to remain free ahead of trial, living in home detention at his parents’ home in Palo Alto, California.

“We believe that this is the largest ever pretrial bond,” Assistant U.S. Attorney Nicolas Roos said Thursday afternoon, calling it a “highly restrictive bail package” that includes an electronic monitoring bracelet and travel limited to the Northern District of California.

Federal prosecutors in Manhattan brought the indictment against Bankman-Fried just over a week ago, saying he misappropriated billions of dollars of FTX customers’ funds to pay expenses and debts of a crypto hedge fund, Alameda Research, of which he was a co-founder and majority share owner.

Until recently, Bankman-Fried was one of the richest people in the cryptocurrency business. The stain of the scandal has already spread to his parents, both Stanford Law professors. Barbara Fried is on the board of the Stanford Ethics in Society Program; her husband, Joseph Bankman, is describes as “a leading scholar in the field of tax law,” according to his bio on the university’s website.

Equity interests the Palo Alto home of Bankman-Fried's parents will secure their son's quarter-billion-dollar personal recognizance bond, and they will co-sign it as well.

U.S. Magistrate Judge Gabriel Gorenstein noted Thursday that Bankman-Fried’s “sufficient notoriety” strongly mitigated any concerns about the defendant's flight-risk potential.

Wearing a dark gray suit and tie, Bankman-Fried was joined by his attorneys Mark Cohen and Chris Evedell, both of whom previously represented Ghislaine Maxwell in her unsuccessful bid to be released on bail ahead of her 2021 criminal trial in the same courthouse on sex-trafficking charges.

FTX founder Sam Bankman-Fried, second right, is escorted out of Magistrate Court toward a Corrections van, following a hearing in Nassau, Bahamas, on Dec. 19, 2022. (AP Photo/Rebecca Blackwell)

New York federal prosecutors unsealed the eight-count criminal indictment against Bankman-Fried following his arrest Monday night by Bahamian authorities at the request of the U.S. government. The crypto maven's jail stint in the Bahamas this past week culminated with him voluntarily agreeing to his extradition to the U.S. after a chaotic hearing in Nassau on Monday.

After the extradition was finalized and Bankman-Friend was taken into FBI custody on Wednesday evening, U.S. Attorney Damian Williams announced the unsealing of guilty pleas signed Monday by FTX's co-founder, Gary Wang, and Alameda's co-founder, Caroline Ellison.

“They are both cooperating with the Southern District of New York,” Williams said Wednesday night in a video statement.

FTX filed for bankruptcy and Bankman-Fried stepped down as CEO after the sudden and spectacular collapse of the crypto exchange he founded in May 2019. FTX customers quickly filed suit for violations of federal anti-racketeering law. 

U.S. District Judge Ronnie Abrams will preside over Bankman-Fried's criminal prosecution. In addition to fraud, the indictment accuses Bankman-Fried of trampling campaign-finance law by making large political campaign donations to both Democratic and Republican candidates using the proceeds of his embezzlement scheme.

According to OpenSecrets.org, a nonpartisan group that tracks campaign spending via Federal Election Commission filings, Bankman-Fried was the second biggest Democratic-leaning megadonor in the 2022 election cycle.

Concurrent with the criminal indictment, the Securities and Exchange Commission filed a civil complaint last week that says Bankman-Fried was "diverting billions" of dollars of customers' money for his "crypto empire,” and illegally using investors’ money to buy real estate on behalf of himself and his family.

Bankman-Fried’s fortune was estimated around $17 billion this year, according to Forbes. He said recently that he did not “knowingly” misuse customers’ funds, and said he believes his millions of angry customers will eventually be made whole.

The Southern District of New York’s rapid FTX-related prosecutions have drawn comparisons to the office’s conviction of Bernie Madoff, who was arrested in December 2008 and charged with masterminding the biggest Ponzi scheme in histor, costing investors $50 billion.

Madoff remained free on $10 million bail modified to include home detention in his luxury Manhattan apartment with electronic monitoring and round-the-clock surveillance. Madoff ultimately pleaded guilty to 11 felony counts and was sentenced by then-U.S. District Judge Denny Chin to 150 years of incarceration. He died in prison last year at age 82.

“When I sentenced Mr. Madoff in 2009, it was fully my intent that he live out the rest of his life in prison,” Judge Chin wrote in 2020, refusing to grant compassionate release for a terminally ill Madoff.

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