In less than a week, the cryptocurrency millionaire Sam Bankman-Fried went from industry leader to industry villain, lost the majority of his money, watched his $32 billion firm go bankrupt, and became the subject of SEC and DOJ investigations.
The case
Olivier Douliery/AFP/Getty Images | FTX founder Sam Bankman-Fried was once nicknamed the “King of Crypto”
Reports of public documents reveal that Bankman-Fried, with the U.S. branch of FTX and other top executives, contributed more than $70 million to U.S. politicians and fundraising groups during the 2021-22 election season. During the 2018 midterm elections, he was the second-largest donor to Democratic-leaning organizations and pushed Congress and U.S. authorities over crypto legislation.
Ryan Salame, chief executive of FTX’s Bahamas subsidiary, donated over $24 million, primarily to Republican organizations. In November, Bankman-Fried resigned as CEO of FTX after the firm crashed into Chapter 11 bankruptcy in Delaware. Since then, seasoned insolvency practitioner John Ray III has been in charge of the bitcoin exchange, and he has secured its assets.
Bankman-Fried arrested
GETTY IMAGES/ BBC | FTX founder Sam Bankman-Fried will be released on $250 million bail
Bankman-Fried was arrested in the Bahamas in December 2022 and charged with, among other things, wire fraud, securities fraud, and money laundering; he has since been extradited to the United States and freed on a $250 million bail, according to Reuters, the biggest pre-trial bond ever. Caroline Ellison and Gary Wang, two former top executives of Bankman-enterprises, Fried’s pled guilty to several fraud counts and are working with federal authorities.
Bankman-Fried, Ellison, and Wang have also been accused separately by the Securities and Exchange Commission of defrauding FTX investors. The story of Bankman-Fried may go down as one of the most jaw-dropping crypto catastrophes in history. He resigned from his crypto exchange, FTX, when it failed due to a domino effect caused by an influx of consumers withdrawing cash, and the firm filed for bankruptcy.
According to the Wall Street Journal, Bankman-Fried may have illegally misappropriated around $10 billion in FTX client cash for his trading company, Alameda Research, whose future is now in jeopardy. And Bankman-Fried is now nearly worthless.
Terms and conditions
Mario Duncanson/ AFP/ Getty Images | Bankman-Fried was extradited from the Bahamas to Westchester County in New York on Wednesday night
Prosecutors and his attorneys agreed upon the terms of Bankman-personal Fried’s recognizance bail. The 30-year-old will enter a plea and be arraigned at his next hearing, presided over by Judge Ronnie Abrams, on January 3 in New York City.
A recognizance bond is the defendant’s written promise to appear in court when required. In exchange, Bankman-camp Fried would not have to fulfill the bail’s full collateral conditions. The bond was backed by the equity in his family’s residence and the signatures of his parents and two other persons with “significant” assets.
In addition to the $250 million package, which prosecutors described as “the largest pre-trial bond ever,” the former crypto billionaire would be required to wear an electronic monitoring bracelet, submit to mental health counseling, and limit his travel to the Northern District of California and the Southern and Eastern Districts of New York.
