Bankman-Fried denied bail
Sam Bankman-Fried, the former CEO of the collapsed crypto exchange FTX, must stay in custody after his arrest on Monday, a court in the Bahamas has ordered, because his risk of fleeing was too great.
In a three-hour hearing at a courthouse in Nassau, capital of the Bahamas, the country’s chief magistrate, Joyann Ferguson-Pratt, was told by a prosecutor, Franklyn Williams, that Bankman-Fried was a flight risk and should be held in custody because he still had access to enough financial resources to flee elsewhere.
Bankman-Fried has been charged by prosecutors in the United States with defrauding investors. He also faces civil securities fraud charges.
His lawyer, Jerone Roberts, told the court that his client was a permanent resident and property owner in the Bahamas, with no incentive to flee the country.
Bankman-Fried would be willing to submit to a curfew and electronic monitoring, Roberts said, adding that his client had to take medication for depression, and doses of Adderall every four hours for attention deficit disorder.
Police escort to the courthouse
Bankman-Fried, who was wearing a white shirt and a blue suit, had arrived at the courthouse with a large police escort. His parents, Stanford Law School professors Joseph Bankman and Barbara Fried, were in the courtroom for the hearing.
After the judge denied bail, Bankman-Fried – who will remain in the custody of the Bahamian authorities until an extradition hearing scheduled for 8 February – was hugged by his parents before being taken away.
Too early to say if customers will retrieve assets
Meanwhile the new chief executive of FTX, John J. Ray III, a lawyer who specialises in corporate restructuring, told politicians in Washington yesterday that it was “too early to tell” whether customers of FTX would get their money back.
Ray testified for roughly four hours before the House Committee on Financial Services, telling committee members that he had found an “unprecedented” lack of record keeping at the company, and his team was still in the early stages of sorting through the exchange’s assets to find money that could be used to repay creditors and consumers.
It was also revealed by Ray that FTX kept few records, tracked invoices in the messaging app Slack and used the consumer tax software QuickBooks, which was, he said, “unusual” for a multi-billion-dollar company.
He said that FTX executives appeared to have carried out “really just old-fashioned embezzlement” rather than the sort of “highly sophisticated” fraud carried out at Enron, the energy trading company that collapsed in 2001 after an accounting scandal. Ray oversaw the unwinding of Enron after its failure.
One committee member asked Ray what role Bankman-Fried would play in FTX in the future, to which Ray replied: “The role he’s currently playing: zero.”
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