Now that Sam Bankman-Fried (SBF) is back in the US, he has been released from federal custody. The New York Times and CNBC report the co-founder of the failed and allegedly fraudulent cryptocurrency exchange FTX was released on $250 million bail, secured by his parent’s home, ahead of his trial on eight criminal charges he faces, in addition to civil suits filed by the SEC and CFTC.
Prosecutors say billions in customer and investor funds are missing, accusing a small circle of insiders at FTX and Bankman-Fried’s crypto hedge fund, Alameda Research, of misusing the money for themselves from the very start of their operation.
For now, the 30-year-old, whose net worth had been calculated to be in the billions until recently, will live in San Francisco with his parents, well-known law professors at Stanford, while wearing an electronic monitoring device. SBF is scheduled to appear in person at his next hearing on the afternoon of January 3rd in New York City.
We didn’t see any mention of any restriction from using computers or the internet, but now that charges have been filed, it would be even more shocking if SBF’s Zoom and Twitter Spaces-powered media tour continues.
Yesterday, Bankman-Fried was still on his way back to the US after being extradited by the Bahamas when a US attorney announced that Caroline Ellison, who was the CEO of SBF’s crypto trading firm Almeda Research, and Gary Wang, the co-founder and former CTO of FTX, had pleaded guilty to federal charges, and are cooperating with prosecutors. Now the DOJ has unsealed their guilty pleas and charges — which they submitted a few days ago on the 19th but were held until SBFs extradition had been secured — while redacting certain information.
As we learned on Wednesday from civil suits filed against them by the SEC and CFTC, prosecutors assert SBF directed Wang to create the ability for Alameda Research and executives at the firm to have “carte blanche” access to FTX customer funds that they used for trading, political donations, paying debts, and on themselves. The lawsuits lay out that Ellison, at the direction of SBF, not only dipped into the FTX customer funds but also manipulated markets to raise the price of FTX’s FTT cryptocurrency token — which the SEC has deemed a security — allowing FTX to use it as collateral in loans and acquisitions.
Both pleaded guilty to charges of wire, commodities, and securities fraud, in addition to charges of money laundering for Ellison.
CAROLINE ELLISON, 28, is charged with and has pled guilty to two counts of conspiracy to commit wire fraud, each of which carry a maximum sentence of 20 years in prison; two counts of wire fraud, each of which carry a maximum sentence of 20 years in prison; one count of conspiracy to commit commodities fraud, which carries a maximum sentence of five years in prison; one count of conspiracy to commit securities fraud, which carries a maximum sentence of five years in prison; and one count of conspiracy to commit money laundering, which carries a maximum sentence of 20 years in prison.
GARY WANG, 29, is charged with and has pled guilty to one count of conspiracy to commit wire fraud, which carries a maximum sentence of 20 years in prison; one count of wire fraud, which carries a maximum sentence of 20 years in prison; one count of conspiracy to commit commodities fraud, which carries a maximum sentence of five years in prison; and one count of conspiracy to commit securities fraud, which carries a maximum sentence of five years in prison.
In a statement, U.S. Attorney Damian Williams said, “Last week, we announced charges against Samuel Bankman-Fried for a sweeping fraud scheme that contributed to FTX’s collapse and for a campaign finance scheme that sought to influence public policy in Washington. As I said last week, this investigation is very much ongoing, and it’s moving very quickly. I also said that last week’s announcement would not be our last, and let me be clear once again, neither is today’s.”