Sam Bankman-Fried, disgraced former CEO of crypto exchange FTX and billionaire political activist, is set to be released from custody on a $250 million bond and restricted to his parents home in Palo Alto, California, following his first appearance in New York federal court Thursday, according to The Wall Street Journal.
Bankman-Fried, who was arrested by Bahamian authorities on Dec. 12 at the request of the U.S. government, initially opted to contest his extradition, but ultimately signed on to the process Monday after being placed into a Bahamian prison known for having a poor standard of living. The former executive will enter his official plea against charges including wire fraud, campaign finance violations and money laundering at a later time, the WSJ reported. (RELATED: Dem-Aligned PACs Are Radio Silent On Returning Nearly $30 Million In SBF Donations)
On Nov. 29, Bankman-Fried claimed he had just $100,000 the last time he had checked, and that “basically everything” he had was tied up in FTX, in an interview with Axios. By Nov. 11, the combined value of Bankman-Fried’s assets plunged from roughly $16 billion to $0, according to an estimate by Bloomberg.
The bond was secured with the assistance of his parents, who both signed onto the bond using equity in the family’s home, according to CNBC. The former businessman’s parents are both professors at Stanford Law School, with his mother, Barbara Fried, having close ties with Democratic dark money group Mind The Gap, before she stepped down following the scandal surrounding her son.
Bankman-Fried’s business associates, Caroline Ellison and Gary Wang, have plead guilty to the charges brought against them for the part they played in an alleged scheme orchestrated by Bankman-Fried to defraud billions from FTX customers, and are cooperating with U.S. authorities, U.S. Attorney Damian Williams announced Wednesday evening.
FTX’s historic collapse followed a liquidity crunch at the firm amid allegations that FTX had loaned more than $10 billion of customers’ assets to Alameda Research, a trading house co-founded by Bankman-Fried and headed by Ellison at the time of its collapse. The crisis rapidly sent the two companies into bankruptcy, evaporating Bankman-Fried’s personal fortune and forcing him to step down as CEO of FTX.
Beyond this sharing of funds, FTX’s new CEO John J. Ray III — most well known for his oversight of gas firm Enron following its historic collapse in the early 2000s — has alleged in bankruptcy proceedings that FTX’s upper management, including Bankman-Fried, used company funds to purchase houses and other personal items and that the company maintained no reliable financial records.
The SEC today charged Caroline Ellison and Gary Wang for their roles in a multiyear scheme to defraud equity investors in the crypto trading platform FTX. Ellison and Wang are cooperating with the ongoing investigation.
— U.S. Securities and Exchange Commission (@SECGov) December 22, 2022
Bankman-Fried now faces a litany of charges from federal prosecutors, the Commodity Futures Trading Commission and the U.S. Securities and Exchange Commission, in addition to a class action lawsuit alleging that he and several celebrity spokespeople knowingly tricked customers into joining a Ponzi scheme.
FTX announced Monday that it intends to recover the tens of millions in political donations made by former executives, including roughly $39 million from Bankman-Fried himself. While some politicians and beneficiaries have already announced plans to return the funds, others, including the Protect Our Future PAC, which received roughly $27 million from Bankman-Fried to boost Democratic candidates during the 2022 election cycle, have not yet publicly stated their intentions.
Bankman-Fried, the second largest individual donor to Democratic groups in the 2022 midterm cycle behind George Soros according to financial watchdog OpenSecrets, said in a Nov. 29 interview that he gave a roughly equal amount to Republicans in unannounced “dark money” because “reporters freak the fuck out if you donate to a Republican.” Investigative journalist Teddy Schleifer reported Dec. 2 that a source close to Bankman-Fried characterized the claim as “flatly untrue,” and argued that while the crypto mogul had given to Republicans, his donations could more accurately be seen as a hedging of bets.
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