Sam Bankman-Fried’s $250 Million Bail Deal: A First Look at the Prosecutor’s Witnesses
A federal judge released the names of two people who co-signed Sam Bankman-Fried’s $250 million bail deal, which allowed him to be released on house arrest while he awaits trial on federal fraud and conspiracy charges.
Prosecutors have described Bankman-Fried’s bail deal as one of the largest ever pre-trial bonds. Bankman-Fried won’t have to pay anything unless he shows up to court.
Bankman-Fried was escorted into the courtroom by a US Marshal, wearing a navy suit jacket and white button-down shirt. As he walked to the defense table, the sound of his shackles being put around his ankle could be heard.
Bankman-Fried replied “Yes, I do.” when the judge asked if he understood the consequences if he skipped out on bail.
There are bail conditions that include mental health treatment, surrendering firearms, and prohibitions against opening any new lines of credit or engaging in transactions over $1,000 without the government’s approval.
Cooperating witnesses, the testimony of other employees, and encrypting messages are some of the evidence against Bankman-Fried.
Pinder reveals the Bankman-Fried bankruptcy and his financial dealings with Alameda and the FTX site
According to court records, two FTX executives have pleaded guilty to several criminal charges and are cooperating with federal prosecutors. Additionally, the pair face civil fraud charges from the Securities and Exchange Commission that were announced Wednesday night.
Bankman- Fried was brought to the United States Wednesday night, according to Sen. Ryan Pinder. The Ministry of Foreign Affairs in the Bahamas confirmed that the Foreign Minister of the country had signed a warrant of surrender allowing his transfer to the United States.
FTX and its sister trading house, Alameda, both filed for bankruptcy last month after investors rushed to pull their deposits from the exchange, sparking a liquidity crisis.
In the weeks since their bankruptcy, FTX’s new CEO, John Ray III, has stated publicly that customer funds deposited on the FTX site were commingled with funds at Alameda, which made a number of speculative, high-risk bets. Ray said the situation at the companies was old-fashioned and that some people were inexperienced and unsophisticated.
In documents made public Wednesday afternoon, the court revealed that Larry Kramer, a former dean of Stanford’s law school, and Andreas Paepcke, a Stanford computer scientist, each signed on as guarantors.
“During the past two years, while my family faced a harrowing battle with cancer, they have been the truest of friends … In turn, we have sought to support them as they face their own crisis,” Kramer said.
Judge Lewis Kaplan ordered the bonds to be on the public court docket after the appeals court didn’t rule in time on a request from Bankman-Fried’s defense lawyers to keep their names confidential.
Federal prosecutors asked the judge to impose a significant restriction on Bankman-Fried’s use of cellphones, computers and the internet after he found “loopholes” in his bail conditions.
“There is now a record before the Court of a defendant who appears motivated to circumvent monitoring and find loopholes in existing bail conditions,” prosecutors said in a letter to the judge.
Judge Lewis Kaplan was concerned about the use of an application or device that might have an auto-delete function.
Prosecutors noted Bankman-Fried chose to use a VPN, or virtual private network, to watch the Super Bowl, even though it was readily available to watch in the US. A VPN is commonly used at businesses, but it also allows a user to disguise the computer they are using to access the internet.
Bankman-Fried, a FTX Security Expert, has been Advised by the Kohn-Kaplan Appellate Court
Bankman-Fried’s attorneys wrote to Judge Lewis Kaplan that they agreed with his proposal for a security expert to only work for the judge. They said they would propose potential candidates by the end of the week.
The judge has been grappling with finding a balance to allow Bankman-Fried access to communication channels so he can prepare his defense against the potential misuse of those apps or VPNs. Bankman-Fried is facing multiple fraud and conspiracy charges.
Bankman-Fried’s attorneys have said the contact with the former employee and VPN use was “benign.” They told the judge that FTX attorneys told them that they needed to use a Virtual Private Network to access the cloud server holding the documents and data.