Former FTX CEO Sam Bankman-Fried will be released on $250 million bail, a federal judge ruled on Thursday.
FTX filed for bankruptcy last month after users learned that the company was intertwined with sister firm Alameda Research; both were controlled by Bankman-Fried and other young executives working from a luxury penthouse in The Bahamas. The entrepreneur was arrested earlier this month by authorities in the island nation, where his companies were headquartered, and extradited to the United States this week.
In a deal greenlit by lawyers representing Bankman-Fried, prosecutors will allow the disgraced would-be wunderkind to pay $250 million in the “largest-ever pretrial bond,” according to a report from CNBC. Bankman-Fried will be required to wear an electronic monitoring bracelet, participate in mental health counseling, and remain within the Northern District of California before his next hearing on January 3. Gabriel Gorenstein, a judge for the Southern District of New York, said that Bankman-Fried would require “strict” supervision as he stays in his parents’ home in Palo Alto, California.
Joseph Bankman and Barbara Fried agreed to secure the $250 million bond using their equity in the home. Bankman-Fried was required to surrender his passport and will need to request approval from the government before making any purchases above $1,000.
The $250 million bail agreement occurs despite earlier claims from Bankman-Fried that he lost all but $100,000 following the collapse of FTX. Bankman-Fried, who had previously been denied bail due to the significant flight risk he poses, could spend as much as 115 years behind bars in the United States if he is convicted on all counts, which include conspiracy to commit commodities fraud, conspiracy to commit securities fraud, and conspiracy to commit money laundering.
Mark Cohen, an attorney for Bankman-Fried who previously defended Jeffrey Epstein confidant Ghislaine Maxwell, said his client was not a flight risk because he “voluntarily consented to come to face these charges,” according to a report from the New York Times.
The former multibillionaire was previously held in Fox Hill Prison, the only government detention center in The Bahamas. According to a report from the State Department, the facility is subject to “overcrowding, poor nutrition, inadequate sanitation, and inadequate medical care,” while some cells were infested with “rats, maggots, and insects.”
Executives behind the defunct cryptocurrency empire may have lost as much as $8 billion in customer funds. Current FTX CEO John Ray, a lawyer who previously managed the implosion of energy company Enron, recently told members of the House Financial Services Committee that he is working to “mitigate, to the greatest extent possible, the harm suffered” by former customers and investors. He repeated earlier assertions that FTX was the worst failure of corporate controls he has witnessed in his entire career.
“Although our investigation is ongoing and detailed findings will have to await its conclusion, the FTX Group’s collapse appears to stem from the absolute concentration of control in the hands of a very small group of grossly inexperienced and unsophisticated individuals who failed to implement virtually any of the systems or controls that are necessary for a company that is entrusted with other people’s money or assets,” he told lawmakers.