1672082915 origin 1

FTX’s Bankman-Fried, Charged with ‘Epic’ Fraud, Released on $250M Bond

origin 1

(Corrects spelling of judge’s name, paragraph 4)

By Luc Cohen and Jody Godoy

NEW YORK (RockedBuzz via Reuters) – Sam Bankman-Fried was released on Thursday with a $250 million bond package as he awaits trial over the collapse of cryptocurrency exchange FTX, which a US prosecutor called a “fraud of epic proportions” .

Federal prosecutors in Manhattan have accused the FTX founder of stealing billions of dollars in client funds to cover the losses of his hedge fund, Alameda Research.

Bankman-Fried was not asked to file a statement on Thursday. He has previously acknowledged failures in risk management at FTX, but said he does not believe he has criminal liability. His defense attorney, Mark Cohen, declined to comment after the hearing in federal court in Manhattan.

U.S. Magistrate Judge Gabriel Gorenstein set Bankman-Fried’s next court date for January 3, 2023, before U.S. District Judge Ronnie Abrams, who will handle the case.

Bankman-Fried founded FTX in 2019. A boom in the values ​​of bitcoin and other digital assets propelled the exchange to a valuation of about $32 billion earlier this year, making the Massachusetts Institute of Technology (MIT ) multiple billionaire university graduate, as well as an influential donor to US political campaigns.

In granting him preemptive release, Gorenstein said that Bankman-Fried had “achieved sufficient notoriety that it would have been impossible” for him to engage in further financial schemes or go into hiding without being recognized.

Following Thursday’s court hearing, the former billionaire was surrounded by photographers as he exited the lower Manhattan courthouse and entered a black SUV. He sported a stubble and a gray suit, a far cry from the shorts and T-shirt that he became famous for wearing in public appearances while running FTX.

Nicolas Roos, a prosecutor, told Gorenstein that the bail package would require Bankman-Fried to turn over his passport and remain in solitary confinement at his parents’ home in Palo Alto, California. He would also be required to undergo regular mental health assessments and treatments.

Roos said that while Bankman-Fried had committed a “fraud of epic proportions,” he had no history of absconding and his financial resources had dwindled significantly.

Bankman-Fried, 30, was arrested last week in the Bahamas, where he lived and where FTX is based, cementing his fall from grace. He left the Caribbean nation in FBI custody Wednesday night.

Cohen said he agreed with the bail terms proposed by prosecutors. He noted that Bankman-Fried’s parents—both Stanford Law School professors—co-signed the bond and deposited the equity in their home as collateral for his return to court. Both appeared at the hearing.

“My client stayed where he was, he made no effort to flee,” Cohen said.

The bond is meant to ensure that if Bankman-Fried flees, the government could confiscate the family’s assets — including their Palo Alto home — up to $250 million. RockedBuzz via Reuters could not determine the family’s total net worth.

Bankman-Fried told a New York Times briefing on Nov. 30, following the stock crash, that he had $100,000 in his bank account.

‘SUFFICIENT AWARENESS’

Wearing seat belts for his legs, Bankman-Fried sat flanked by his lawyers and nodded as the judge informed him that if he did not appear in court, a warrant would be issued for his arrest. Gorenstein said conditions also included electronic monitoring via a device to be installed before leaving the courthouse and a ban on opening new credit lines or businesses.

He spoke only when Gorenstein asked if he understood the conditions of his release and that he could be charged with a further crime if he failed to appear in court.

“Yes, I know,” Bankman-Fried replied.

But concerns about the mingling of funds between FTX and Alameda led to a flurry of customer withdrawals in early November, eventually forcing the exchange to file for bankruptcy on Nov. 11.

Roos said the evidence at the trial would consist of testimony from “multiple cooperating witnesses” as well as thousands of pages of written submissions.

Just hours after Bankman-Fried’s plane took off from the Bahamas, Damian Williams, Manhattan’s top federal attorney, announced that two of Bankman-Fried’s closest aides — former Alameda CEO Caroline Ellison and co- FTX founder Gary Wang – had pleaded guilty and were cooperating with prosecutors.

Details of their partnership were kept under wraps until Bankman-Fried departed the Bahamas, according to court documents filed Thursday.

(Reporting by Luc Cohen in New York; Editing by Sam Holmes, Nick Zieminski, Noeleen Walder and Daniel Wallis)