Sam Bankman-Fried (SBF), the former CEO of FTX, appeared in court on Tuesday with Mark Cohen, his newly hired attorney. SBF's legal team requested Bahamian judge Joyann Ferguson-Pratt to release SBF on bail with an ankle bracelet. According to accounts, Joseph Bankman and Barbara Fried, SBF's parents, attended the lengthy court hearing. Judge Ferguson-Pratt ended the case by rejecting SBF's request for bail and ordering Bankman-Fried to remain in the Bahamian jail until February 8, 2023.
Secret Signal Chat Group "Wirefraud" Revealed, Bankman-Fried's Media Tour Ends
Sam Bankman-Fried (SBF), the co-founder of FTX, experienced a complete paradigm shift during the first week of November. The first straw was the publication by Coindesk of an exposé on SBF's quantitative trading company Alameda Research and the vast amount of FTT tokens it was holding. Following the publication of the study, FTX and Alameda came under the spotlight, and Changpeng Zhao, CEO of Binance, said that his exchange will be selling off all of its FTT tokens.
These two incidents increased the likelihood that FTX and Alameda were bankrupt, and on November 8, 2022, Binance announced that it would buy FTX following a thorough analysis of the company's financials. But the agreement never materialized, and at 4:00 p.m. The world's largest cryptocurrency asset exchange by transaction volume said it would be pulling out of the acquisition of FTX on November 9, 2022 (ET).
At this point, all of the digital assets that were in FTX's bank accounts had either been withdrawn by customers—many of whom were inhabitants of the Bahamas—or had simply vanished. SBF said that FTX and Alameda had filed for Chapter 11 bankruptcy protection, along with about 130 related entities, two days after Binance withdrew from the agreement.
SBF also disclosed that in order to manage the insolvency and reorganization process, John J. Ray III took over as CEO of FTX in his place. Since the bankruptcy filing, SBF has had a substantial number of interviews with the media as alarming information was being reported by a number of media outlets.
FTX's SBF and his inner circle used a private chat group named "Wirefraud," according to a report by the Australian Financial Review (AFR) that was released before SBF was apprehended in The Bahamas.
“[AFR] has [learned] that FTX founders Sam Bankman-Fried and Zixiao ‘Gary’ Wang, along with FTX engineer Nishad Singh and former Alameda Research chief executive Caroline Ellison, used a chat group on Signal in the hope that the information would remain hidden.”
Bankman-Fried was taken into custody 24 hours after the AFR article was released. The co-founder of FTX was further charged with eight counts of financial fraud by Southern District of New York (SDNY) prosecutor Damian Williams and indicted by a federal grand jury in Manhattan. The U.S. then charged SBF further. Commodity Futures Trading Commission and Securities and Exchange Commission (SEC) litigation (CFTC).
The Bahamas' Judge Rejects Bail
SBF appeared in court that day, where his defense team tried to secure his release on bail. According to one story, SBF's parents, Joseph Bankman and Barbara Fried, were present during the court proceeding. SBF’s mother allegedly laughed out loud every time her son was called a “fugitive,” and his father put his fingers in his ears. In an effort to secure SBF's release on $250,000 bail, his lawyer, Mark Cohen, who also defended Ghislaine Maxwell in her sex trafficking case, made the request.
Prosecutors said that SBF was a "flight risk" because of all of his financial connections during the hearing, and Cohen is cited as arguing that his client “suffered from depression, insomnia, and ADD for over a decade.” Judge Ferguson-Pratt, however, did not appear to be persuaded by the assertions that SBF had mental problems or the fact that he had turned in his passport.
Bail was rejected, and SBF was ordered to remain in detention until his court date on February 8, 2023, according to Judge Ferguson-Pratt. The New York Post reported that after the verdict, SBF bowed his head and hugged his parents before being led in handcuffs from the courtroom.