NEW YORK - FTX founder Sam Bankman-Fried made his first U.S. court appearance Thursday in New York, facing eight counts of fraud and conspiracy.
He was released on a massive $250-million bond, pending trial for one of the largest financial fraud cases ever. Bankman-Fried will be staying at him parents’ home, on a quiet street only steps from the Stanford University campus. Both his parents are Stanford law professors.
"What makes it fascinating is this is the largest bond in U.S. history," said Neama Rahmani, a former federal prosecutor and President of West Coast Trial Lawyers. Rahmani called this amount unprecedented. For example, fraudster Bernie Madoff had a 10 million dollar bond. Elizabeth’s Holmes of Theranos received a $500,000 bond.
Rahmani said, "He was potentially a flight risk but he did wave extradition from the Bahamas and came back to New York. So I think the government saw the writing on the wall and they weren’t able to get him detained so they negotiated a very high bond amount to make sure Bankman-Fried would make his court appearances."
Bankman-Fried is accused of stealing billions of dollars from FTX and its investors and customers, and using that money for his own personal gain. He bought luxury real estate, donated to political campaigns, and alleged used the FTX money to back up his hedge fund, Alameda Research.
This week, two members of Bankman-Fried’s inner circle, including his ex-girlfriend Caroline Ellison - pleaded guilty to federal charges and are cooperating with the investigation.
"These are two high level executives who have already pled guilty and are cooperating in the case against Bankman-Fried so that’s bad news for him," said Rahmani.
Financial advisor James McBride said the FTX disaster has caused a lot of damage in the cryptocurrency world. "Personally I think cryptocurrency is like air in a bottle. Except there’s not air and there’s no bottle," said McBride.
He said investors are losing confidence, and should be asking themselves, what is the value of crypto versus the risk? "It’s in a very direct way called in the viability of cryptocurrencies," said McBride. "I think it’s causing investors in the general public to ask what is a cryptocurrency and what is the value of a cryptocurrency?"
Bankman-Fried’s next court date is set for January 3rd in New York.
This story was reported from Oakland, Calif.