© 2023 All Rights reserved WUSF
Play Live Radio
Next Up:
0:00
0:00
Available On Air Stations

Sam Bankman-Fried to be released on $250 million bail into parents' custody

FTX founder Sam Bankman-Fried, center, is escorted from the Magistrate Court in Nassau, Bahamas, Wednesday, Dec. 21, after agreeing to be extradited to the U.S.
Rebecca Blackwell
/
AP
FTX founder Sam Bankman-Fried, center, is escorted from the Magistrate Court in Nassau, Bahamas, Wednesday, Dec. 21, after agreeing to be extradited to the U.S.

Updated December 22, 2022 at 2:56 PM ET

Sam Bankman-Fried, perhaps the most infamous person in the world of cryptocurrencies, will be released on $250 million bail as he prepares to face criminal charges that he lied to investors and took billions of dollars of his customers' money for his own personal use.

The 30-year-old founder of the cryptocurrency exchange FTX will stay in the custody of his parents, according to Nicholas Biase, a spokesman for the U.S. Attorney for the Southern District of New York.

He will also have to wear an ankle monitor and undergo a mental-health evaluation, and will be barred from taking out credit of more than $1,000, court records show.

Bankman-Fried appeared in a court in New York City on Thursday, a little more than a week after he was arrested at his home in the Bahamas at the request of the U.S. government, which has charged him with eight counts of fraud, conspiracy, money laundering and illegal campaign contributions.

He was taken into FBI custody and extradited to the United States on Wednesday, the U.S. Attorney for the Southern District of New York, Damian Williams, said in a video posted to Twitter.

Williams has said that Bankman-Fried allegedly perpetrated one of the biggest frauds in U.S. history.

Most of the charges involve Bankman-Fried's personal hedge fund, Alameda Research. Prosecutors say that billions of dollars flowed out of FTX and into Alameda, never to be seen by customers again, despite reassurances the money was safe.

According to the Justice Department, as well as financial regulators, millions went to fund a lavish lifestyle for Bankman-Fried or were donated to politicians he was courting.

Two of his former colleagues are cooperating in the federal investigations

While Bankman-Fried was en route on Wednesday night, Williams announced that two of his former friends and co-workers – Caroline Ellison and Gary Wang — pleaded guilty to fraud charges by the SDNY, and are cooperating with its investigation.

Both have also been charged with defrauding investors by the Securities and Exchange Commission, the top Wall Street regulator, and are currently working with it in its investigation into Bankman-Fried, under the possibility of reaching a settlement with reduced penalties. Similarly, they are not contesting charges brought by the Commodity Futures Trading Commission.

Ellison, who is often described as Bankman-Fried's ex-girlfriend, was CEO of Alameda. With Bankman-Fried, Wang founded FTX.

"Gary has accepted responsibility for his actions and takes seriously his obligations as a cooperating witness," Wang's attorney Ilan Graff said in a statement.

An attorney for Ellison didn't respond to a request for comment, and a spokesperson for Bankman-Fried declined to comment.

In appearances and interviews over the last month, Bankman-Fried has sought to transfer blame to Ellison and others, portraying himself as generally clueless about the financial workings of Alameda and FTX.

The SEC also alleges that Bankman-Fried and his colleagues planned to manipulate the price of FTT, an exchange crypto security token that was integral to FTX.

"When FTT and the rest of the house of cards collapsed, Mr. Bankman-Fried, Ms. Ellison, and Mr. Wang left investors holding the bag," SEC chairperson Gary Gensler said in the release. "Until crypto platforms comply with time-tested securities laws, risks to investors will persist."

After a week in jail, he signaled he was willing to be extradited

Like much of what has happened since FTX filed for bankruptcy last month, Bankman-Fried's extradition was complicated.

After saying he would fight his removal, he signaled earlier this week that he would agree to return to the United States. Then, a hearing on a possible extradition was abruptly scrapped over objections from his counsel.

On Wednesday, Bankman-Fried agreed in court to be taken back to the United States, but the timing of his travel was unclear.

While out on bail, he will stay in Northern California with his parents, who are professors at Stanford University. They put up equity in their home for his bail bond, and two other unidentified people signed bail agreements as well, court records show.

Bankman-Fried watched FTX's value soar to some $32 billion after he founded it three years ago. Earlier this year, a splashy public relations blitz that included a Super Bowl ad and high-profile celebrity endorsements, promoted FTX as "the safest and easiest way to buy and sell crypto."

Then, under a cloud of suspicions about its solvency, FTX – along with Alameda and dozens of affiliates scattered around the world – abruptly filed for bankruptcy.

Copyright 2022 NPR. To see more, visit https://www.npr.org.

David Gura
Based in New York, David Gura is a correspondent on NPR's business desk. His stories are broadcast on NPR's newsmagazines, All Things Considered, Morning Edition and Weekend Edition, and he regularly guest hosts 1A, a co-production of NPR and WAMU.
WUSF 89.7 depends on donors for the funding it takes to provide you the most trusted source of news and information here in town, across our state, and around the world. Support WUSF now by giving monthly, or make a one-time donation online.