FTX founder Sam Bankman-Fried is to be released on bail, as ruled by a New York federal judge on Wednesday.
The bail deal, as orchestrated by federal prosecutors and Bankman Fried’s defense attorneys, will see the former billionaire post a $250 million bond and be required to stay at his parents’ home in Palo Alto, California.
No Prison for SBF?
According to Assistant U.S. Attorney Nicolas Roos, Bankman-Fried was responsible for perpetrating a “fraud of epic proportions.” However, he chose to allow for bail given that Bankman-Fried opted to waive extradition.
The bail terms are strict. Besides his monetary penalty, Bankman-Fried will have to wear an electronic monitoring bracelet, and be disallowed from leaving th Northern District of California. Judge Gabriel Gorenstein added that Bankman-Fried would require “strict” supervision during his stay.
He will also have to submit to mental health counseling. The ex-CEO has previously claimed to be depressed and “sad” for an extended period of time and required medication to cope.
The $250 million payment, which prosecutors call the “largest ever pretrial bond, is a big step up from the $100,000 Bankman-Fried claimed he’d had left in his account in November. On the other hand, it pales in comparison to the $10 billion shortfall his company had on customer deposits last month, which ultimately drove it to bankruptcy.
Bankman-Fried’s parents, both of whom are Stanford law professors, were present in the courtroom on Thursday. They will be required to post equity in their home for partial satisfaction of bail conditions.
Finally, the former FTX boss will be prevented from taking out any new lines of credit while he awaits trial.
FTX Executives Plead Guilty
On Thursday, FTX co-founder Gary Wang and Alameda Research former CEO Caroline Ellison pled guilty to various forms of fraud, including securities fraud and money laundering, as part of a multi-year scheme involving Sam Bankman-Fried. Reports suggest they each face 50 years and 110 years in prison, respectively.
Gary Wang reportedely engineered a backdoor into FTX’s accounting system that allowed FTX to siphon money off to Alameda. FTX’s bankruptcy lawyer, John Ray, later confirmed that Alemeda used FTX clients’ funds for margin trading, and lost tremendous money in the process.
The trading desk was also exempt from FTX’s auto-liquidation engine – a trading advantage Bitcoin billionaire Michael Saylor referred to as “god mode.”