Sam Bankman-Fried, the disgraced former cryptocurrency executive, was granted release from federal custody in a Manhattan court on Thursday under highly restrictive bail conditions, including a $250 million bond secured by his parents’ interest in their California home and a requirement that he remain in home detention with them.
It was the latest twist in a swiftly unfolding saga that has turned one of the crypto world’s most recognizable paper billionaires into its most prominent villain within weeks, drawing comparisons to Bernie Madoff, the notorious fraudster whose money management operation turned out to be the largest Ponzi scheme in history.
Mr. Bankman-Fried, 30, appeared in federal court just hours after his extradition from the Bahamas, where he was arrested at a luxury apartment complex on Dec. 12. FTX, the exchange that Mr. Bankman-Fried founded, was based in the Caribbean nation.
His release also followed an announcement by Damian Williams, the U.S. attorney for the Southern District of New York, on Wednesday night that two former executives of Mr. Bankman-Fried’s businesses, Caroline Ellison and Gary Wang, had pleaded guilty to federal fraud charges and were cooperating with prosecutors. The charges against the executives are likely to further complicate Mr. Bankman-Fried’s defense.
The criminal investigation into FTX and its related entities has moved with startling speed. In under two months, FTX went from a flourishing exchange to a bankrupt entity whose executives are facing criminal charges for some of the financial world’s most serious violations. Prosecutors have said Mr. Bankman-Fried’s crimes led to the implosion of his exchange and billions in customer losses.
Just a few months ago, cryptocurrency enthusiasts hailed Mr. Bankman-Fried as the savior and spokesman of the shambolic industry, willing to bail out other companies and vouch for crypto’s legitimacy to lawmakers and regulators. Now, with his fortune gone and charges mounting, Mr. Bankman-Fried faces what is likely to be a colossal legal fight with few good outcomes.
On Thursday, the judge, Gabriel W. Gorenstein, warned Mr. Bankman-Fried that if he failed to appear in court or violated any of the other bail conditions, a warrant would be issued for his arrest and he and his parents would be responsible for paying the hefty bond.
The $250 million personal recognizance bond — a written promise to appear in court as needed — will be secured by the parents’ Bay Area home, the judge said. Mr. Bankman-Fried was also required to surrender his passport and to receive mental health evaluation and treatment. Any expenses above $1,000 will require prior approval by the government or the court.
As part of the bail arrangement, Mr. Bankman-Fried will live with his parents, the Stanford Law School professors Joe Bankman and Barbara Fried. He will be under strict electronic monitoring, including a bracelet that was to be placed on him before he left the courthouse.
Asked whether he understood, Mr. Bankman-Fried responded, “Yes, I do,” the only words he uttered in the hearing, which lasted less than an hour.
Discussions about a bail deal had begun even before Mr. Bankman-Fried was extradited. In court on Thursday, Nicolas Roos, an assistant U.S. attorney, described the proposed package that had been worked out with the defense lawyers.
Mr. Roos said that Mr. Bankman-Fried had committed crimes of “epic proportions” and that the case against him involved cooperating witnesses, encrypted text messages and tens of thousands of pages of financial records. But he noted that Mr. Bankman-Fried had family and community ties and that his wealth had “diminished significantly.”
He also pointed out that Mr. Bankman-Fried had consented to extradition. Had he resisted the process, leading to a drawn-out legal fight, it was “a near certainty” the government would have opposed any pretrial release, Mr. Roos added.
Mr. Bankman-Fried was escorted into court by federal marshals. He was wearing a dark suit, his ankles were shackled, and he was seated between his lawyers, Mark Cohen and Christian Everdell. He sat hunched over, with his head tilted down slightly.
Mr. Cohen argued that Mr. Bankman-Fried was not a flight risk and had agreed to return to New York to face the charges. “He wants to address them,” Mr. Cohen said.
Judge Gorenstein appeared to agree. “It would be very difficult for this defendant to hide without being recognized,” he said. “So I believe that the risk of flight is appropriately mitigated.”
Mr. Bankman-Fried has been charged with two counts of wire fraud and six counts of conspiracy related to securities and commodities fraud, money laundering, and violations of campaign finance laws.
Last week, Mr. Williams, the U.S. attorney, called FTX “one of the biggest financial frauds in American history.” The charges against Mr. Bankman-Fried could carry what would amount to a life sentence if he was convicted.
