FTX founder Bankman-Fried is under house arrest with a US$250 million bond
Cryptocurrency giant FTX, which was once worth US$32 billion at its peak, essentially collapsed over the course of 10 days.
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The backstory: Cryptocurrency giant FTX, which was once worth US$32 billion at its peak, essentially collapsed over the course of 10 days after media reports worried people about the company’s health. In fact, after the reports, it’s estimated that customers tried to withdraw around US$6 billion. To try and get FTX out of the mess, Binance was going to bail it out. But it then pulled out of the deal, meaning FTX and its founder Sam Bankman-Fried had no other choice but to file for bankruptcy and quit as CEO.
More recently: Bankman-Fried has been in the Bahamas, where FTX Digital Markets is based, and he was arrested two weeks ago. Last week, he was extradited to the US, where he’s facing eight criminal counts, including wire fraud, wire fraud conspiracy, securities fraud and money laundering. On the same night that Bankman-Fried was on his way to New York, Caroline Ellison (once Bankman-Fried’s girlfriend and former CEO of Alameda Research) and FTX co-founder Gary Wang pleaded guilty to fraud charges.
The development: Now, Bankman-Fried is under house arrest at his parents’ Silicon Valley home after being released on a US$250 million bond as he waits for trial. This bond was secured by several people, including his parents (and equity in their home) and two other financially responsible parties.
Key comments:
"Our hope was to be able to support FTX's customers to provide liquidity, but the issues are beyond our control or ability to help," said Binance in a statement when walking away from the bailout.
"I didn't knowingly commit fraud," said Sam Bankman-Fried, FTX founder, to BBC News. "I didn't want any of this to happen. I was certainly not nearly as competent as I thought I was."
"I f---ed up," FTX founder Sam Bankman-Fried told investors on a call when the FTX crisis first began, according to people with knowledge of the conversation.
"Samuel Bankman-Fried is now in FBI custody and is on his way back to the United States," said Damian Williams, attorney for the Southern District of New York. "He will be transported directly to the Southern District of New York and he will appear in court before a judge in this district as soon as possible."
"As alleged, Mr. Bankman-Fried, Ms. Ellison, and Mr. Wang were active participants in a scheme to conceal material information from FTX investors, including through the efforts of Mr. Bankman-Fried and Ms. Ellison to artificially prop up the value of FTT [FTX's in-house token], which served as collateral for undisclosed loans that Alameda took out from FTX pursuant to its undisclosed, and virtually unlimited, line of credit," said Sanjay Wadhwa, Deputy Director of the SEC's Division of Enforcement.
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