FTX Crypto Founder Denied Bail, Will Spend Holidays in Bahamian Jail

The former billionaire founder of the failed FTX crypto exchange has been denied bail.  

As a result, Sam Bankman-Fried will spend the holidays in a Bahamian jail cell, rather than his oceanside penthouse, while he awaits a likely extradition effort to return him to the U.S.  

While the 30-year-old had requested bail be set at $250,000 during his first court appearance after his Monday (Dec. 12) arrest, the presiding judge rejected that request and ordered that he be sent to prison, Bloomberg reported Tuesday (Dec. 13). 

“Risk of flight is so great that Samuel Bankman-Fried ought to be remanded in custody,” Chief Magistrate Joyann Ferguson-Pratt said, according to the report. “I am not satisfied that there is any condition that I could place on Samuel Bankman-Fried to sufficiently satisfy, because of his access to substantial finances, that he would not, and could not, abscond.” 

During the appearance, Bankman-Fried’s lawyer also said that he would fight extradition to the United States. A hearing on the extradition has been set for Feb. 8. 

As PYMNTS reported Tuesday, Bankman-Fried faces charges from the U.S. Department of Justice (DOJ), Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC). 

A federal indictment Monday revealed that he is being charged by the DOJ with eight counts that range from wire fraud to various conspiracy counts. 

Separately, a civil complaint from the SEC charged Bankman-Fried with two counts of civil securities fraud and alleged that he and FTX’s crypto empire was fraudulent “from the start” — going back to 2019. 

The CFTC has charged Bankman-Fried and FTX with two counts of violating antifraud provisions in the Commodity Exchange Act. 

If convicted, he faces substantial jail time. Wire fraud sentences alone can run up to 20 years. 

The denial of bail in the Bahamas and the disclosure of the specific charges in the U.S. came on the same day that Bankman-Fried had been expected to testify before the U.S. House Financial Services Committee. The Tuesday hearing is part of the committee’s investigation into the downfall of FTX. 

While the hearing kicked off without Bankman-Fried, it continued with another witness: John J. Ray III, the CEO appointed to manage FTX’s bankruptcy process. 

Ray described the situation at FTX as “old-fashioned embezzlement.” He said the underlying cause of the firm’s collapse was the “unlimited ability” of its small leadership team to misappropriate funds and deploy them for their own use, adding that FTX was “not solvent” prior to the now infamous “run” on the firm.