Sam Bankman-Fried hearing results: $250 million bail and exile to family home

Larry Jansen on January 2, 2023

…

Sam Bankman-Fried: The FTX creator can now be released on a $250 million bond thanks to a decision made on Thursday by a federal judge in New York.

He is currently being tried for fraud and other offenses.

The news

At roughly 2:00 p.m., Sam Bankman-Fried, his parents, lawyer, and court security exited the Manhattan US District Court.

The prosecutors and his attorneys accepted the bail conditions for Bankman-personal Fried’s recognizance.

The 30-year-old’s next hearing will be heard on January 3 in New York City under the direction of Judge Ronnie Abrams.

He will answer the charges there and enter a plea.

Bond

A written pledge from the defendant to show up in court in response to a summons is known as a recognizance bond.

Sam Bankman-Fried won’t have to provide all the collateral for the bail to be released.

The equity in his family’s home served as security for the bond signed by his parents and two additional parties with significant holdings.

The prosecution billed the $250 million package, which also includes an electronic monitoring bracelet, as the largest ever pretrial bond.

He must consent to receive therapy for his mental health and promise not to visit the Southern, Eastern, or Northern Districts of California or New York.

In the court

Bankman-Fried would need ongoing supervision after being allowed to go back to his parents’ California home, according to Judge Gabriel Gorenstein.

In the courtroom were SBF’s parents, who are both Stanford law professors.

Two US marshals in blue jackets and brown shoes were around the FTX founder.

While in the courtroom, he switched his ankle shackles for an ankle monitor.

Sam Bankman-Fried only said something once the court asked whether he knew what would happen if he violated the terms of his bail.

“Yes, I do,” said SBF.

Additionally, opening new credit accounts with a balance of more than $1,000 is not permitted for Bankman-Fried.

As they wait for the trial to begin, federal regulators call him a “brazen” fraud at his crypto-empire.

Assistant US Attorney Nicolas Roo stated during the court proceedings that SBF was the center of “a fraud of epic dimensions.”

Roos claimed that SBF had drastically reduced his financial assets, freely returned to the US, and had never attempted to flee.

Former $32 billion bitcoin tycoon Sam Bankman-Fried allegedly claimed that he only had $100,000 in his bank account.

The result was the man’s quick fall from grace.

Accusations

According to Sam Bankman-Fried’s accusations, he is guilty of:

Perpetrating a multibillion-dollar fraud on his investors
Using customer funds to purchase properties
Funding political donations
Backstop trades at his hedge fund Alameda Research

The Commodity Futures Trading Commission filed new charges against SBF, FTX, and Alameda Research on Monday.

They asserted that Bankman-Fried broke the Commodities Exchange Act and that FTX messed up customer funds.

Alameda Research allegedly had access to more than $8 billion in client money.

Alameda has had access to and used FTX customer funds for its operations and activities from the company’s creation in 2019, including:

Trading
Funding
Investment
Borrowing/lending

The CFTC concurred with the SEC’s allegations that Sam Bankman-Fried ran his empire as a fraud from the beginning.

On November 11, FTX filed for bankruptcy protection in Delaware.

Sam Bankman-Fried’s replacement as CEO of FTX, John Ray III, stated he had never witnessed such a loss of corporate control.

SBF’s lieutenants

Gary Wang, a co-founder of FTX, and Caroline Ellison, a former co-CEO of Alameda Research, both entered guilty pleas to federal charges on Wednesday.

Gary Wang admitted the following charges:

Conspiracy to commit wire fraud
Wire fraud
Conspiracy to commit commodities fraud
Conspiracy to commit securities fraud

The following was what Caroline Ellison had done:

Two counts of wire fraud
Two counts of conspiracy to commit wire fraud
Conspiracy to commit commodities fraud
Conspiracy to commit securities fraud
Conspiracy to commit money laundering

On Wednesday, news of their plea deals was made public.

SBF

The US Attorney charged Sam Bankman-Fried with eight offenses, including money laundering and securities fraud.

On Wednesday night, he was flown from the Bahamas to New York.

Compared to other federal white-collar defendants, SBF has a much higher bond.

Bernie Madoff obtained a $10 million bail in anticipation of his imminent trial for running a Ponzi scheme.
Former Enron CEO Jeff Skilling posted a $5 million bond.
Elizabeth Holmes, the Theranos founder, posted a $500,000 bond.

Reference:

FTX founder Sam Bankman-Fried to be released on $250 million bail, will live with his parents

CFTC piles on new charges against Bankman-Fried, FTX and Alameda

FTX’s Gary Wang, Alameda’s Coraline Ellison plead guilty to federal charges, cooperating with prosecutors

Indictment against Nate Chastain to push through after he fails to convince judge to dismiss charges

Anna Evans on November 7, 2022

…

Nate Chastain, the former head of product at OpenSea, attempted to convince a judge to dismiss the charges made against him.

Chastain was charged with wire fraud and money laundering.

Although he tried, Chastain failed to convince the judge.

As a result, his trial will proceed.

Indictment

According to the government, Nate Chastain illegally profited from the sale of NFTs last year.

He was responsible for deciding which NFT should be featured on the OpenSea homepage.

The indictment used his authority and knowledge to allege that Chastain bought certain NFTs before they were featured.

It also said he flipped them for profit once their value increased.

According to prosecutors, Chastain set up wallet addresses to hold the NFTs.

He would then wire profits back to himself.

Nate Chastain

In September, OpenSea parted ways with Chastain upon learning about the investigations.

The company also sought the help of a third party to review the incident and make recommendations to strengthen its existing protocols.

Nate Chastain moved to have the charges dismissed.

He made a series of arguments but failed to sway the judge in the case.

According to Chastain, the information he allegedly misappropriated wasn’t ‘property within the meaning of the statute.

He also argued that he didn’t commit wire fraud, saying that if he did, it would necessitate “the existence of trading in securities or commodities.”

Securities and commodities don’t include NFTs.

The former OpenSea employee called for the charges to be dismissed.

The judge

Regarding money laundering, Nate Chastain said the government is trying to “criminalize the mere movement of money.”

He also claims that they didn’t prove the concealment and financial transaction elements of money laundering charges.

When the judge dismissed the motion, they referenced a different court case.

In that case, a Wall Street Journal reporter entered a scheme with traders.

The reporter tipped traders off on the contents and timing of articles before publishing them, sharing the resulting profits.

The document reads:

“The columnist and traders were charged with, and convicted of, both securities fraud and mail and wire fraud.”

“So, not ‘insider training’ as conventionally understood, but definitely ‘wire fraud.’”

The judge conceded that the term ‘insider trading’ could be misleading.

However, he said the right response would be to strike the phrase from the indictment.

It would also prevent the government from using the term for the trial.

Reference:

Indictment against former OpenSea employee moves forward