Sam Bankman-Fried's $250 million bail bond is a 'joke' and prosecutors have been too 'lenient' with the FTX founder, securities lawyer says

A Sam Bankman-Fried, founder and former CEO of crypto currency exchange FTX, sits after his extradition from The Bahamas with his attorneys Mark Cohen and Christian Everdell at his arraignment hearing in Manhattan federal court in New York City, U.S., December 22, 2022 in this courtroom sketch.

Jane Rosenberg/Reuters

• Parts of Sam Bankman-Fried's bail conditions are "ludicrous," a securities lawyer said. 
• For Bankman-Fried's $250 million bond, there was no cash exchanged for his release, but a promise not to flee the country. 
• Bankman-Fried is "pushing the envelope" with prosecutors, attorney James Murphy told CoinDesk.

FTX founder Sam Bankman-Fried's bail conditions and the $250 million bond for his release are "ludicrous," according to a long-time securities lawyer. 

Bankman-Fried was released on a $250 million bail bond in late December, which was cosigned by his parents, who pledged their home in Palo Alto as collateral. This week, it was learned that there were two other guarantors as well, Stanford University's Andreas Paepcke and Larry Kramer, a former dean at the university's law school.

"The original bond is a joke," James Murphy, a cofounder of law firm Murphy & McGonigle PC, told CoinDesk TV. "Prosecutors wanted to look tough and wanted to be able to say, 'This is the largest bond anybody's ever seen.'"

Murphy says there was no real money used for Bankman-Fried's bond, but a promise not to flee the country. Kramer and Paepcke would only have to "write a check" if Bankman-Fried decides to skip town. 

"Normally you've got to put up property assets to back the bond or go to a bail bondsman and give them 10% to 15% of the face amount of the bond...None of that happened," Murphy said.

Bankman-Fried's bail conditions tightened earlier this month after he sent a text to a former top FTX executive, which an overseeing judge described as a "material threat of inappropriate contact with prospective witnesses."

After this, Bankman-Fried was also using a virtual private network (VPN) to access the internet. Prosecutors expressed concern that he was using it to trade crypto, which is in violation of his bail terms. Attorneys for Bankman-Fried say their client was only using a VPN to watching football. 

"I cannot explain it, based on my 30 years of doing this. I've never seen anything this lenient in a situation where someone has millions of victims," Murphy said. "I don't know why [prosecutors] continue to be lenient, as he's kind of pushing the envelope in terms of what he can do."

Federal prosecutors allege that Bankman-Fried helped orchestrate "one of the biggest financial frauds in American history." He is facing eight criminal charges, including conspiracy to misappropriate FTX customer funds.

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