20221222 FTX founder Sam Bankman-Fried
FTX founder Sam Bankman-Fried Image Credit: AP

Sam Bankman-Fried will be released on a $250 million bond package while he awaits trial on fraud charges related to the collapse of the FTX crypto exchange, a federal magistrate judge said on Thursday.

Federal prosecutors in Manhattan have accused him of stealing billions of dollars in FTX customer funds to plug losses at his hedge fund, Alameda Research.

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Bankman-Fried was not asked to enter a plea on Thursday. He has previously acknowledged risk-management failures at FTX, but has said he does not believe he has criminal liability. His defense lawyer, Mark Cohen, declined to comment after the hearing in Manhattan federal court.

Nicolas Roos, a prosecutor, told U.S. Magistrate Judge Gabriel Gorenstein that the bail package would require Bankman-Fried to surrender his passport and remain in home confinement at his parents' home in Palo Alto, California. He would also be required to undergo regular mental health treatment and evaluation.

Roos called the package the "largest ever pretrial bond." Bankman-Fried , 30, was arrested last week in the Bahamas, where he lived and where FTX is based, cementing the one-time billionaire's fall from grace. He departed the Caribbean nation in FBI custody on Wednesday night.

Cohen said he agreed with prosecutors' proposed bail conditions. He noted that his parents - both Stanford Law School professors - would co-sign the bond and post the equity in their home as assurance for Bankman-Fried's return to court.

"My client remained where he was, he made no effort to flee," Cohen said.

Wearing a gray suit and leg restraints, Bankman-Fried sat flanked by his lawyers and nodded when the judge informed him that if he fails to appear in court, a warrant would be issued for his arrest.

He spoke only when asked by Gorenstein whether he understood the conditions of his release, and that he could be charged with an additional crime if he fails to show up to court.

"Yes I do," Bankman-Fried replied.

Gorenstein set Bankman-Fried's next court date for Jan. 3, 2023 before U.S. District Judge Ronny Abrams, who will handle the case.

"I'm going to require strict pretrial supervision," Gorenstein said, with conditions including electronic monitoring and a ban on opening new lines of credit or businesses.

He said Bankman-Fried had "achieved sufficient notoriety that it would be impossible" for him to hide without being recognized or engage in further financial schemes.