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Bankman-Fried’s parents have been physically threatened, his lawyers say

NEW YORK (Reuters) – Sam Bankman-Fried’s parents have been getting physical threats since the collapse of their son’s now-bankrupt FTX cryptocurrency exchange, his lawyers said on Tuesday.

The disclosure was made in a filing in Manhattan federal court, where the lawyers asked that the names of two remaining sureties for Bankman-Fried’s $250 million bond not be disclosed.

Bankman-Fried has been required to live with his parents, Joseph Bankman and Barbara Fried, with electronic monitoring since bail conditions were set.

In Tuesday’s filing, his lawyers said the parents “have in recent weeks become the target of intense media scrutiny, harassment, and threats. Among other things, Mr. Bankman-Fried’s parents have received a steady stream of threatening correspondence, including communications expressing a desire that they suffer physical harm.”

As a result, the lawyers said there was “serious cause for concern” the additional sureties might face similar privacy intrusions, threats and harassment, and that this overcame any public right of access to their identities.

Bankman and Fried are professors at Stanford Law School.

They agreed to co-sign their son’s bond, with the additional sureties signing separate bonds in lower amounts.

Bankman-Fried is expected to plead not guilty later on Tuesday to criminal charges that he cheated investors and looted billions of dollars at FTX, a source familiar with the matter said last week.

He is accused of illegally using FTX customer deposits to support his Alameda Research hedge fund, buy real estate and make millions of dollars in political contributions.

(Reporting by Jonathan Stempel in New York; Editing by Tomasz Janowski)

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Winklevoss says crypto broker Genesis negotiating in bad faith

(Reuters) – Cameron Winklevoss, who founded crypto exchange Gemini Trust Co with his twin brother, on Monday accused Digital Currency Group (DCG) CEO Barry Silbert of “bad faith stall tactics” and asked him to commit to resolving $900 million worth of disputed customer assets by Jan. 8.

Gemini has a crypto lending product called Earn in partnership with DCG’s crypto firm Genesis. Genesis halted customer withdrawals in November, following the collapse of major crypto exchange FTX.

Winklevoss said Genesis owed more than $900 million to some 340,000 Earn investors, and that he had been trying to reach a “consensual resolution” with Silbert for the past six weeks.

“However, it is now becoming clear that you have been engaging in bad faith stall tactics,” Winklevoss wrote in an open letter to Silbert that was posted on Twitter.

“We are asking you to publicly commit to working together to solve this problem by January 8th, 2023,” he added. The letter did not say what would happen if an agreement was not reached by Jan. 8.

Winklevoss wrote that DCG owed Genesis $1.675 billion, which was money that Genesis in turn owed to Earn users and other creditors, adding “this mess is entirely of your own making.”

Silbert responded in a tweet that DCG did not borrow $1.675 billion from Genesis.

“DCG has never missed an interest payment to Genesis and is current on all loans outstanding,” Silbert said, adding that DCG delivered a proposal to Genesis and Winklevoss’ advisers on Dec. 29 and did not receive a response.

Genesis wrote in a letter to clients on Dec. 7 that it was working to preserve client assets and strengthen liquidity, adding that it would take “weeks rather than days” to form a plan.

(Reporting by Mrinmay Dey in Bengaluru; Editing by Tiffany Wu and Matthew Lewis)

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U.S. review could delay or block Binance deal for Voyager Digital

By Dietrich Knauth

(Reuters) – Binance’s $1 billion acquisition of bankrupt crypto lender Voyager Digital could be delayed or blocked by a U.S. national security review, according to a Friday bankruptcy court filing.

    The crypto exchange’s U.S.-based affiliate Binance.US intends to buy Voyager’s crypto lending platform with a bid that includes $20 million in cash and crypto assets that will be used to repay Voyager’s customers.

But the U.S. Committee on Foreign Investment in the United States (CFIUS), an interagency body that vets foreign investments into U.S. companies for national security risks, said Friday that its review “could affect the ability of the parties to complete the transactions, the timing of completion, or relevant terms.”

Attorneys for Voyager and Binance.US did not immediately respond to requests for comment Friday.

CFIUS has increasingly been used by Washington as a tool to stymie Chinese investment in the United States.

Binance, is owned by Chinese-born and Singapore-based Changpeng Zhao and has no permanent headquarters. The company has been the subject of a money laundering probe by U.S. prosecutors. Binance.US, based in Palo Alto, California, has said that its separate American exchange is “fully independent” of the main Binance platform.

CFIUS did not mention any specific security concerns raised by the Voyager acquisition in its court filing, but it said that bankruptcy courts have sometimes ruled that national security concerns can prevent a company from bidding on assets in bankruptcy.

Voyager filed for bankruptcy in July, months after the crash of major crypto tokens TerraUSD and Luna sent shockwaves across the digital asset industry.

Voyager initially planned to sell its assets to FTX Trading, but that deal imploded when FTX went bankrupt in November amid a frenzy of customer withdrawals and fraud allegations that led to the arrest of founder Sam Bankman-Fried.

(Reporting by Dietrich Knauth)

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FTX says Bahamas regulators hold $296 million, not $3.5 billion of company’s assets

(Reuters) – FTX on Friday disputed the Securities Commission of the Bahamas’ claims that the regulator was holding $3.5 billion of the bankrupt cryptocurrency exchange’s assets.

When the digital assets of FTX were transferred to the regulator in November, their value was just $296 million, FTX said in a statement.

(Reporting by Niket Nishant in Bengaluru; Editing by Shailesh Kuber)

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U.S. examining crypto wallets linked to FTX’s Bankman-Fried – Bloomberg News

(Reuters) – Federal prosecutors are looking into a series of crypto transactions that online analysts have tied to digital wallets associated with Sam Bankman-Fried, Bloomberg News reported on Friday, citing a person familiar with the matter.

Prosecutors from the Southern District of New York (SDNY) are looking at whether Bankman-Fried, if he’s making the transactions, is just moving around his own assets or cashing them out without approval, the report said.

A spokesperson for the Manhattan U.S. attorney’s office and an attorney for Bankman-Fried did not respond immediately to Reuters requests for comment.

Bankman-Fried, the former chief executive officer of bankrupt crypto exchange FTX, tweeted that he was not behind the transactions.

“I’m not and couldn’t be moving any of those funds; I don’t have access to them anymore,” he said.

(Reporting by Niket Nishant in Bengaluru; Editing by Shailesh Kuber)

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Bankman-Fried set to enter initial not guilty plea in FTX fraud case – source

By Jack Queen

NEW YORK (Reuters) – Sam Bankman-Fried is expected on Tuesday to enter an initial plea of not guilty to criminal charges that he cheated investors and looted billions of dollars at his now-bankrupt FTX cryptocurrency exchange, according to a source familiar with the matter.

Bankman-Fried is accused of illegally using FTX customer deposits to support his Alameda Research hedge fund, buy real estate and make millions of dollars in political contributions.

He is scheduled to appear at 2 p.m. EST (1900 GMT) on Tuesday before U.S. District Judge Lewis Kaplan in Manhattan to enter a plea.

A lawyer for Bankman-Fried did not immediately reply to a request for comment.

Bankman-Fried has been free on $250 million bond following his extradition last month from the Bahamas, where he lived and where the exchange was based.

Since his release, Bankman-Fried has been subject to electronic monitoring and required to live with his parents, both professors at Stanford Law School in California.

The Massachusetts Institute of Technology graduate has been charged with two counts of wire fraud and six conspiracy counts, including to launder money and commit campaign finance violations. He could face up to 115 years in prison if convicted.

Bankman-Fried has admitted to making mistakes running FTX but said he did not believe he was criminally liable.

(Reporting by Jack Queen; Editing by Noeleen Walder and Daniel Wallis)

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Bahamas regulator holds FTX assets pending delivery to customers, creditors

(Reuters) – The Securities Commission of the Bahamas said on Thursday that it is holding FTX assets worth $3.5 billion based on market pricing at the time of transfer on a temporary basis to deliver them to customers and creditors who own them.

FTX’s Bahamas unit’s digital assets were transferred to digital wallets under the exclusive control of the commission in November soon after the company and its hedge fund Alameda Research and dozens of affiliates filed for U.S. bankruptcy.

Upon completion of the transfer, FTX founders Sam Bankman-Fried and Gary Wang no longer had access to the tokens that were transferred or frozen, the executive director of the commission, Christina Rolle, said in an affidavit filed with the Bahamas Supreme Court.

“All transferred assets were and remain under the sole control of the commission,” Rolle said.

Lawyers for crypto exchange FTX earlier this month opposed a demand for internal records from its Bahamian business, saying they “do not trust” the Bahamian government with data that could be used to siphon off assets from the bankrupt company.

The authorities in the Bahamas, where the company had its headquarters, appointed liquidators to wind down FTX’s international trading business soon after the company announced bankruptcy.

(Reporting by Urvi Dugar and Akanksha Khushi in Bengaluru; Editing by Leslie Adler)

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FTX customers ask bankruptcy court to keep their names secret

By Dietrich Knauth

(Reuters) – A group of FTX customers from outside the United States have asked a U.S. bankruptcy judge to keep their names secret during the cryptocurrency exchange’s bankruptcy case, saying that revealing their identities could expose them to identity theft and other scams.

Bankrupt companies typically reveal the names and amounts of debt held by their creditors, including individual customers.

But in a late Wednesday night court filing, a group of non-U.S. FTX customers who say they are owed $1.9 billion told U.S. Bankruptcy Judge John Dorsey that this case is different.

They also warned that disclosure could undermine FTX’s efforts to sell parts of its business, which it wants to do to make more money available for creditors.

“Cryptocurrency holders are particularly susceptible to fraud and theft because cryptocurrency is difficult to trace and there are fewer security safeguards in place to protect the assets,” the group wrote.

FTX, once led by Sam Bankman-Fried, is also seeking an exception that would keep its customers’ names secret.

That request has been opposed by the U.S. Department of Justice’s bankruptcy watchdog, as well as various media including the New York Times and Wall Street Journal.

Customer privacy has been an issue in other crypto-related bankruptcies.

In October, for example, the judge overseeing Celsius Network’s bankruptcy ruled that customer names must be revealed, but their addresses and email addresses could be kept secret.

Two years ago, Dorsey let the customer list of crypto lender Cred remain secret, to preserve Cred’s ability to “market and sell that list” as part of a possible sale of the company.

Dorsey will hear arguments on customer privacy at a Jan. 11 hearing in Wilmington, Delaware. He has asked a committee representing all FTX creditors to weigh in.

Lawyers for the official FTX creditors committee did not immediately respond to a request for comment on Thursday.

(Reporting by Dietrich Knauth; Editing by David Gregorio)

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Solana crypto token loses most of its value in 2022, FTX collapse weighs

NEW YORK (Reuters) – The price of Solana, a cryptocurrency token that had been lauded by FTX founder Sam Bankman-Fried, fell 10.36% on Wednesday, and is down 94.2% so far in 2022.

The collapse of FTX has rippled across the industry, hobbling liquidity at firms with exposure to what was once one of the world’s biggest crypto exchanges.

Solana, or SOL, is the token behind the upstart Solana blockchain, which supports smart contracts, including non-fungible tokens, and has emerged as a rival to the ethereum blockchain.

Bankman-Fried, who is expected to enter a plea next week to criminal charges he defrauded investors and looted billions of dollars in customer funds at FTX, frequently praised Solana. FTX and Alameda, Bankman-Fried’s trading firm, held Solana tokens on their balance sheets.

While Solana has no direct relation to FTX, and had limited exposure to the failed exchange, its association with Bankman-Fried has been a drag.

“The general problem with crypto is that its lack of intrinsic value means that values are based on confidence and perceived utility. If those suffer in relation to a specific token, then it suffers,” said Steve Sosnick, chief strategist at Interactive Brokers.

A representative for Solana was not immediately available for comment.

SOL has dropped 51.14% since the furor around FTX began unfolding on Nov. 2. In the same period, ether has fallen about 21.3% and bitcoin 17.6%.

The price of Serum, or SRM, the token for the decentralized exchange of the same name created by Bankman-Fried on the Solana blockchain, is down 80.5% since Nov. 2, trading at just over 14 cents, according to coinmarketcap.com.

The total market capitalization of the cryptocurrency market now stands at $798.4 billion, according to the website, down from a peak of over $3 trillion in Nov. 2021.

(Reporting by John McCrank; Editing by David Gregorio)

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Sam Bankman-Fried to enter plea in FTX fraud case

By Jonathan Stempel

NEW YORK (Reuters) – Sam Bankman-Fried is expected to enter a plea next week to criminal charges he defrauded investors and looted billions of dollars in customer funds at his failed FTX cryptocurrency exchange.

The 30-year-old is expected to be arraigned on the afternoon of Jan. 3, 2023, before U.S. District Judge Lewis Kaplan in Manhattan federal court, court records on Wednesday showed.

Kaplan was assigned to the case on Tuesday, after the original judge recused herself because her husband’s law firm had advised FTX before its collapse.

Prosecutors have accused Bankman-Fried of engaging in a years-long “fraud of epic proportions,” by using customer deposits to support his Alameda Research hedge fund firm, buy real estate and make political contributions.

Bankman-Fried is charged with two counts of wire fraud and six counts of conspiracy, including to launder money and commit campaign finance violations, and if convicted could spend decades in prison.

Before his Dec. 12 arrest, Bankman-Fried acknowledged risk-management failures at FTX, but said he did not believe he was criminally liable.

Two of his associates, former Alameda chief executive Caroline Ellison and former FTX chief technology officer Gary Wang, have pleaded guilty over their roles in FTX’s collapse and agreed to cooperate with prosecutors.

A lawyer for Bankman-Fried did not immediately respond to requests for comment.

Bankman-Fried was released on Dec. 22 on a $250 million bond and ordered to stay with his parents in Palo Alto, California, where they teach at Stanford Law School. He is subject to electronic monitoring.

FTX filed for bankruptcy protection on Nov. 11. Its new chief executive, John Ray, told Congress on Dec. 13 that the exchange lost $8 billion of customer money while being run by “grossly inexperienced, non-sophisticated individuals.”

(Reporting by Jonathan Stempel in New York; Editing by Matthew Lewis)

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Dollar touches one-week high vs yen thanks to rise in bond yields

By Kevin Buckland and Amanda Cooper

LONDON/TOKYO (Reuters) – The dollar touched its highest in over a week against the yen on Wednesday, boosted by a jump in Treasury yields and by anticipation among investors of a rebound in Chinese growth as COVID-19 curbs loosen.

The yen also came under pressure after the Bank of Japan signaled that a surprise policy shift last week did not mark the start of a broader withdrawal of monetary stimulus.

The dollar rallied by as much as 0.67% to 134.40 in Asian trading, the most since Dec. 20, when the BOJ sent the pair spiralling lower with an unexpected loosening of the 10-year Japanese government bond yield policy band.

That day, the yen staged its biggest one-day rally against the dollar in 24 years, closing 3.8% higher on the day, as traders speculated about an eventual unwinding of stimulus.

A summary of opinions from the meeting though, released Wednesday, showed policymakers backing a continuation of ultra-accommodative policy, even as they discussed growing prospects the country could see higher wage growth and sustained inflation next year.

“It basically confirmed that the BOJ surprise from last week was a one-off, but from a longer-term viewpoint nobody believes it,” said Osamu Takashima, head of G10 FX strategy at Citigroup Global Markets Japan, who expects dollar-yen to fall through 130 in the second half of next year.

“But in the near term, dollar-yen is bouncing back,” he said. “Now, the market is expecting a solid recovery in the Chinese economy,” and those hopes have strongly lifted bond yields, buoying dollar-yen, he added.

The 10-year Treasury yield, which tends to have a high correlation with the dollar-yen pair, was at 3.8316%, down 3 basis points, having hit a six-week high of 3.862% the previous day.

Throwing a spanner into the works for markets in the final weeks of the year is China’s rapid dismantling of its strict zero-COVID policies, which have severely hampered its economy for nearly three years.

Investors are faced with having to reconcile the pickup in economic activity as China’s consumers and businesses return to some kind of normality, with the impact of a surge in infections on the recovery.

“With infection levels running at many thousands per day, it’s little wonder that China’s COVID response should top many analysts’ list of concerns about 2023,” David Cottle, an analyst at DailyFX, said.

The dollar index, which measures the greenback against six major currencies, rose 0.1% to 104.31. It hit a six-month low of 103.44 two weeks ago when the Federal Reserve slowed interest rate hikes to a half-point pace.

Fed officials including Chair Jerome Powell though have stressed since then that policy tightening will be prolonged, with a higher terminal rate, fueling worries of a U.S. slowdown.

“The dollar is in a very interesting situation,” said Bart Wakabayashi, a branch manager at State Street in Tokyo.

“If we have a recession in the U.S., the Fed will have to cut rates, and obviously you will want to sell the dollar,” he said. “At the same time, if there’s a global recession, people will buy the dollar as a haven. So the dollar is in a bit of a conundrum, and you have to be really careful what currency you’re buying or selling against.”

The euro was flat at $1.0637, having traded steadily around six-month highs for the past couple of weeks, since European Central Bank President Christine Lagarde stressed rate hikes would need to continue.

Sterling held at $1.2028 against the dollar and was steady against the euro at 88.45 pence.

The Australian dollar rose 0.4% to 0.07% to $0.6758, while the New Zealand dollar rose 0.41% to $0.6299.

(Reporting by Kevin Buckland; Editing by Stephen Coates & Simon Cameron-Moore)

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Crypto exchange Kraken to stop operations in Japan

(Reuters) – U.S.-based crypto exchange Kraken said on Wednesday said it has decided to cease its operations in Japan.

Kraken will deregister from the Financial Services Agency (JFSA) as of Jan. 31, 2023, it said in a statement.

(Reporting by Rhea Binoy in Bengaluru; Editing by Savio D’Souza)

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FTX customers file class action to lay claim to dwindling assets

By Tom Hals and Dietrich Knauth

(Reuters) – FTX customers filed a class action lawsuit against the failed crypto exchange and its former top executives including Sam Bankman-Fried on Tuesday, seeking a declaration that the company’s holdings of digital assets belong to customers.

The lawsuit is the latest legal effort to lay claim to the dwindling assets of FTX, which is already feuding with liquidators in the Bahamas and Antigua as well as the bankruptcy estate of Blockfi, another failed crypto company.

FTX pledged to segregate customer accounts and instead allowed them to be misappropriated and therefore customers should be repaid first, according to the lawsuit filed in U.S. Bankruptcy Court in Delaware.

“Customer class members should not have to stand in line along with secured or general unsecured creditors in these bankruptcy proceedings just to share in the diminished estate assets of the FTX Group and Alameda,” said the complaint.

FTX did not immediately respond to a request for comment.

Bahamas-based FTX halted withdrawals last month and filed for bankruptcy after customers rushed to pull their holdings from the what was once the second-largest cryptocurrency exchange after questions surfaced about its finances.

Bankman-Fried faces charges stemming from what a federal prosecutor called a “fraud of epic proportions” that included allegedly using customer funds to support his Alameda Research crypto trading platform.

Bankman-Fried has acknowledged risk-management failures at FTX but said he does not believe he has criminal liability. He has not yet entered a plea and was released on a $250 million bond last week that included restrictions on his travel.

The proposed class, which wants to represent more than 1 million FTX customers in the United States and abroad, seeks a declaration that traceable customer assets are not FTX property. The customer class also wants the court to find specifically that property held at Alameda that is traceable to customers is not Alameda property, according to the complaint.

The lawsuit seeks a declaration from the court that funds held in FTX U.S. accounts for U.S. customers and in FTX Trading accounts for non-U.S. customers or other traceable customer assets are not FTX property. The customer class also wants the court to find specifically that property held at Alameda that is traceable to customers is not Alameda property, according to the complaint.

If the court determines it is FTX property, then the customers seek a ruling that they have a priority right to repayment over other creditors.

Crypto companies are lightly regulated and often based outside the United States and deposits are not guaranteed as U.S. bank and brokerage deposits are, complicating the question of whether the company or customers own the deposits.

(Reporting by Tom Hals in Wilmington, Delaware; Editing by Sam Holmes)

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U.S. charges accused Mango crypto manipulator with fraud

By Jonathan Stempel

NEW YORK (Reuters) – U.S. prosecutors have filed criminal charges of commodities fraud and manipulation against a man accused of trying to steal about $110 million in October by rigging the Mango Markets cryptocurrency exchange.

According to a complaint made public on Tuesday in Manhattan federal court, Avraham Eisenberg’s trades in futures related to Mango’s crypto token MNGO enabled him to withdraw $110 million in cryptocurrencies from other investors’ deposits, with no apparent intention to repay the funds.

Eisenberg could not be immediately reached for comment, and it is unclear whether he has a lawyer.

Mango is a decentralized cryptocurrency exchange run by Mango DAO that lets investors lend, borrow, swap, and use leverage to trade cryptocurrency assets.

The Dec. 23 complaint signed by FBI Special Agent Brandon Racz said Eisenberg on Oct. 11 used two accounts to concurrently buy and sell futures based on the relative values of MNGO and the stablecoin USD Coin (USDC).

By being on both sides of the transaction, Eisenberg artificially inflated the price of MNGO relative to USDC, allowing him to borrow and then withdraw $110 million of different cryptocurrencies, the complaint said.

Mango soon began negotiations with Eisenberg and reached a settlement to recoup $67 million.

“All mango depositors will be made whole,” with token holders who vote for the settlement agreeing not to “pursue any criminal investigations or freezing of funds once the tokens are sent back,” a community post said at the time.

Eisenberg claimed responsibility for the trading, the complaint said, and tweeted on Oct. 15 that “the exchange this took place on, Mango Markets, became insolvent.”

He also tweeted: “I believe all of our actions were legal open market actions, using the protocol as designed, even if the development team did not fully anticipate all the consequences of setting parameters the way they are.”

Mango could not immediately be reached for comment. The office of U.S. Attorney Damian Williams in Manhattan did not immediately respond to a request for comment.

The case is U.S. v. Eisenberg, U.S. District Court, Southern District of New York, No. 22-mj-10337.

(Reporting by Jonathan Stempel in New York; Additional reporting by Hannah Lang; Editing by Rosalba O’Brien)

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U.S. probes how $370 million vanished in hack after FTX bankruptcy – Bloomberg News

(Reuters) – Federal prosecutors are investigating an alleged cybercrime that drained more than $370 million from crypto exchange FTX hours after it filed for bankruptcy, Bloomberg News reported on Tuesday citing a person familiar with the case.

The criminal probe into the stolen assets, launched by the Department of Justice is separate from fraud case against FTX co-founder Sam Bankman-Fried, the report added.

A spokesperson for the Manhattan U.S. attorney’s office said he could not confirm or comment on the issue, while DoJ and FTX did not immediately respond to a Reuters request for comment.

FTX filed for U.S. bankruptcy last month and Bankman-Fried stepped down as chief executive, after traders pulled billions from the platform in three days and rival exchange Binance abandoned a rescue deal.

The U.S. Department of Justice accused Bankman-Fried of causing billions of dollars of losses related to FTX, which a U.S. prosecutor called a “fraud of epic proportions.”

Bankman-Fried founded FTX in 2019 and rode a boom in the values of bitcoin and other digital assets to become a billionaire several times over as well as an influential donor to U.S. political campaigns.

The FTX collapse has fanned fears about the future of the crypto industry after the beleaguered exchange outlined a “severe liquidity crisis”.

(Reporting by Manya Saini in Bengaluru; Editing by Shailesh Kuber)

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Bankman-Fried’s criminal case assigned to Judge Lewis Kaplan – court filing

(Reuters) – Sam Bankman-Fried’s criminal case stemming from the collapse of the FTX crypto exchange that he founded was assigned to U.S. District Court Judge Lewis Kaplan in Manhattan, according to a Tuesday court filing.

(Reporting by Tom Hals in Wilmington, Delaware)

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FTX’s Bankman-Fried, charged with ‘epic’ fraud, released on $250 million bond

By Luc Cohen and Jody Godoy

NEW YORK (Reuters) – Sam Bankman-Fried was released on a $250 million bond package on Thursday while he awaits trial over the collapse of the FTX crypto exchange, which a U.S. prosecutor called a “fraud of epic proportions.”

Federal prosecutors in Manhattan have accused the FTX founder of stealing billions of dollars in customer funds to plug losses at his hedge fund, Alameda Research.

Bankman-Fried was not asked to enter a plea on Thursday. He has previously acknowledged risk-management failures at FTX, but has said he does not believe he has criminal liability. His defense lawyer, Mark Cohen, declined to comment after the hearing in Manhattan federal court.

U.S. Magistrate Judge Gabriel Gorenstein set Bankman-Fried’s next court date for Jan. 3, 2023, before U.S. District Judge Ronnie Abrams, who will handle the case.

Bankman-Fried founded FTX in 2019. A boom in the values of bitcoin and other digital assets propelled the exchange to a valuation of some $32 billion earlier this year, making the Massachusetts Institute of Technology (MIT) graduate a billionaire several times over, as well as an influential donor to U.S. political campaigns.

In granting him pretrial release, Gorenstein said Bankman-Fried had “achieved sufficient notoriety that it would be impossible” for him to engage in further financial schemes or to hide without being recognized.

After Thursday’s court appearance, the one-time billionaire was surrounded by photographers as he exited the lower Manhattan courthouse and entered a black SUV. He sported facial stubble and a gray suit – a far cry for the shorts and T-shirt he became notorious for wearing in public appearances while running FTX.

Nicolas Roos, a prosecutor, told Gorenstein that the bail package would require Bankman-Fried to surrender his passport and remain in home confinement at his parents’ home in Palo Alto, California. He would also be required to undergo regular mental health treatment and evaluation.

Roos said that while Bankman-Fried had carried out a “fraud of epic proportions,” he had no history of flight and his financial assets had reduced significantly.

Bankman-Fried, 30, was arrested last week in the Bahamas, where he lived and where FTX is based, cementing his fall from grace. He departed the Caribbean nation in FBI custody on Wednesday night.

Cohen said he agreed with prosecutors’ proposed bail conditions. He noted that Bankman-Fried’s parents – both Stanford Law School professors – would co-sign the bond and post the equity in their home as assurance for his return to court. Both appeared at the hearing.

“My client remained where he was, he made no effort to flee,” Cohen said.

The bond is meant to ensure that if Bankman-Fried flees, the government could confiscate the family’s assets – including their Palo Alto home – up to $250 million. Reuters could not determine the family’s total net worth.

Bankman-Fried said at a New York Times conference on Nov. 30, following the exchange’s collapse, that he had $100,000 in his bank account.

‘SUFFICIENT NOTORIETY’

Wearing leg restraints, Bankman-Fried sat flanked by his lawyers and nodded when the judge informed him that if he fails to appear in court, a warrant would be issued for his arrest. Gorenstein said conditions also included electronic monitoring via a device to be fitted before he left court, and a ban on opening new lines of credit or businesses.

He spoke only when asked by Gorenstein whether he understood the conditions of his release, and that he could be charged with an additional crime if he fails to show up to court.

“Yes I do,” Bankman-Fried replied.

But concerns about commingling of funds between FTX and Alameda led to a flurry of customer withdrawals in early November, ultimately forcing the exchange to declare bankruptcy on Nov. 11.

Roos said that evidence at trial would consist of testimony from “multiple cooperating witnesses,” as well as thousands of pages of written communications.

Just hours after Bankman-Fried’s plane from the Bahamas took off, Damian Williams, the top federal prosecutor in Manhattan, announced that two of Bankman-Fried’s closest associates – former Alameda CEO Caroline Ellison and FTX co-founder Gary Wang – had pleaded guilty and were cooperating with prosecutors.

Details of their cooperation were kept under wraps until Bankman-Fried left the Bahamas, according to court papers filed on Thursday.

(This story has been corrected to fix the spelling of the judge’s first name in paragraph 4)

(Reporting by Luc Cohen in New York; Editing by Sam Holmes, Nick Zieminski, Noeleen Walder and Daniel Wallis)

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Explainer-How did Bankman-Fried secure $250 million bail?

By Jack Queen

(Reuters) – FTX founder Sam Bankman-Fried clinched a bail deal on Thursday that would see him released on a $250 million bond secured against his parents’ property with restrictions on his movement.

Here is an explainer on how his deal stacks up and how bail works:

Was Bankman-Fried expected to get bail?

Defendants are presumed to be eligible for bail unless prosecutors can prove that no set of conditions could ensure that they would return to court. As Bankman-Fried was accused of a white collar, or financial, crime, it would have been surprising if he had not received bail.

How did Bankman-Fried secure bail?

Defendants secure bail by putting up enough of their own assets to cover a portion of their bond.

These so-called bond packages are mixes of assets that can include cash, real estate or anything else of value. They are often co-signed by family members who would be on the hook if a defendant flees.

White collar defendants often have the means to put up bond packages, but defendants with limited assets will often use a bail bondsman.

Bankman-Fried’s bail was secured by his parents Joseph Bankman and Barbara Fried, who offered up their home in Palo Alto, California.

Does the bail amount mean Bankman-Fried or his family has $250 million?

No. In Bankman-Fried’s case, the $250 million bond is secured by his parents’ home. Since Bankman-Fried’s parents signed the bond agreement, they would be on the hook for $250 million if their son flees.

“They can take everything else,” said Michael Bachner, a New York criminal defense attorney. “They can go ahead and take the bank accounts, the IRA accounts, stock accounts.”

The $250 million bond does not reflect the family’s assets, which could not be determined. Bankman-Fried said in late November that he now had “close to nothing” left and is down to one working credit card with “maybe $100,000 in that bank account.”

Is this the largest bail in white collar history?

It’s certainly big. New York federal prosecutors have described Bankman-Fried’s alleged crimes and the collapse of his $32 billion crypto empire as one of the largest financial frauds in U.S. history. His bond package far exceeds some of the most notorious cases in that history.

“It’s the largest bond I’ve ever heard of in my history of doing bonds,” said Ira Judelson, a prominent New York bail bondsman who specializes in high-profile defendants.

Elizabeth Holmes, the founder of blood testing startup Theranos who was convicted of defrauding investors in January, was released after her 2018 arrest on a $500,000 bond after surrendering her passport.

The late financier Bernard Madoff, whose $65 billion Ponzi scheme was the largest in history, was released in 2008 on a $10 million bond after surrendering his passport and consenting to strict monitoring conditions and curfews.

Will Bankman-Fried be traveling abroad?

Defendants typically have to surrender their passports and wear monitoring devices.

Prosecutor Nicolas Roos told U.S. Magistrate Judge Gabriel Gorenstein that the bail package would require Bankman-Fried to surrender his passport and remain in home confinement at his parents’ Palo Alto home. He would also be required to undergo regular mental health treatment and evaluation.

How long could Bankman-Fried be out on bail?

A while. A trial in New York is likely more than a year away as prosecutors build their case and both sides spar over evidence.

(Reporting by Jack Queen; Editing by Megan Davies and Daniel Wallis)

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Alameda’s ex-CEO tells judge she hid billions in loans to FTX execs

By Luc Cohen

NEW YORK (Reuters) – Sam Bankman-Fried and other FTX executives received billions of dollars in secret loans from the crypto mogul’s Alameda Research, the hedge fund’s former chief told a judge in her guilty plea for her role in the exchange’s collapse.

Caroline Ellison, former chief executive of Alameda Research, said she agreed with Bankman-Fried to hide from FTX’s investors, lenders and customers that the hedge fund could borrow unlimited sums from the exchange, according a transcript of her Dec. 19 plea hearing that was unsealed on Friday.

“We prepared certain quarterly balance sheets that concealed the extent of Alameda’s borrowing and the billions of dollars in loans that Alameda had made to FTX executives and to related parties,” Ellison told U.S. District Judge Ronnie Abrams in Manhattan federal court, according to the transcript.

Ellison is cooperating with prosecutors as part of her plea agreement.

Bankman-Fried has been accused of orchestrating an “epic” fraud that led to the loss of billions of dollars of customer and investor funds.

He was released on Thursday on a $250 million bail. He has acknowledged risk-management failures at FTX but said he does not believe he has criminal liability and he has not entered a plea.

(Reporting by Luc Cohen in New York; Writing by Tom Hals in Wilmington, Del.; Editing by Matthew Lewis)

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FTX opposes BlockFi’s claim to Bankman-Fried’s Robinhood shares

By Dietrich Knauth

(Reuters) – Collapsed crypto exchange FTX on Thursday asked a U.S. bankruptcy judge to stop crypto lender BlockFi from laying claim to more than $440 million worth of Robinhood stock purchased by indicted FTX founder Sam Bankman-Fried.

BlockFi had filed a lawsuit on Nov. 28 demanding the turnover of 56 million Robinhood shares that were allegedly pledged as collateral for BlockFi’s loans to the FTX-affiliated crypto hedge fund Alameda Research.

But FTX and Alameda went bankrupt without repaying the BlockFi loans, and U.S. bankruptcy law protects the companies from debt collection efforts like BlockFi’s lawsuit, FTX said in a filing in U.S. bankruptcy court in Delaware.

FTX said it believes that the shares are actually owned by Alameda Research, and that the bankrupt FTX companies must hold onto the stock while investigating other disputed claims to the equity shares’ ownership.

Bankman-Fried himself has claimed ownership of the Robinhood shares, and an individual FTX creditor has asked a court in Antigua, where FTX is incorporated, to make the Robinhood shares available to repay FTX creditors, according to FTX.

FTX said Bankman-Fried sought to claim the Robinhood shares as “a source of payment for legal expenses.” Bankman-Fried was arraigned Thursday in New York on fraud charges, and released on a $250 million bond.

FTX, Alameda, and more than 100 FTX affiliates filed for bankruptcy protection on Nov. 11, after a three-day period in which customers withdrew $6 billion in assets from the crypto exchange.

FTX argued that BlockFi is attempting “an end-run” around U.S. legal protections for bankrupt companies by tailoring its lawsuit to target a non-bankrupt holding company rather than Alameda. Even though the company, Emergent Fidelity, holds the Robinhood shares, Alameda ultimately owns the shares and owes the debt to BlockFi, according to FTX.

BlockFi did not immediately respond to a request for comment.

Emergent holds a 7.42% share of Robinhood, according to Refinitiv data. Bankman-Fried began building his stake in Robinhood in the middle of March, according to a U.S. Securities & Exchange Commission filing.

(Reporting by Dietrich Knauth; Editing by Alexia Garamfalvi and Stephen Coates)