Sam Bankman-Fried’s bail conditions are “ridiculous,” said James Murphy, a securities attorney and founder of Ludlow Street Advisors, a platform geared towards the Metaverse, crypto and Web3.
Murphy, former chairman and co-founder of the law firm Murphy & McGonigle PC, said no real money was used in Bankman-Fried’s loan, just a promise if he were to flee the country.
“The original bond is a joke,” Murphy said Thursday on CoinDesk TV’s “First Mover.”
In December, Bankman-Fried was arrested on a number of charges “in a global scheme to defraud and defraud customers and lenders of FTX and Alameda, the defendant’s crypto hedge fund, as well as conspiracy to defraud the US government” to the Justice Department . After being extradited from the Bahamas to the United States and arrested there, Bankman-Fried was released on $250 million bail co-signed by his parents, who pledged their Palo Alto home as collateral.
According to Murphy, the agreement his parents made to pay $250 million if Bankman-Fried decides to flee the United States is not what it appears because the parents “as far as we know, the net worth is nowhere near that amount have”.
On Wednesday, Judge Lewis Caplan of the Southern District of New York (SDNY) announced the names of the other two co-signers of the bond, Andreas Paepcke of Stanford University, a senior research scientist; and Larry Kramer, once the dean of the university’s law school. They had agreed to pay $200,000 and $500,000 respectively. However, Murphy said, only if Bankman-Fried decides to skip town do they “have to write a check.”
The terms of their bonds had the same terms, according to Murphy, who previously questioned whether the terms of Bankman-Fried’s bond were actually material.
“Usually you have to post real estate assets to cover the deposit or go to a deposit manager and give them 10 to 15% of the face amount of the deposit,” he said. In Bankman-Fried’s case, “none of that happened,” Murphy said, adding that “Sam didn’t leave anything” and “his parents didn’t leave any cash.”
However, Anthony Michael Sabino, co-founder of the law firm Sabino & Sabino PC, told CoinDesk in an interview that there isn’t a bail agency in the US that “is going to post bail, let alone [for] someone of that colossal kind, unless he’s holding either cash or a mortgage on someone’s property or jewelry.
Sabino, also a law professor at St. John’s University, added that bond issuers would take more risks if money wasn’t placed up front. He added that “People don’t usually discuss it when bonds are deposited. That’s a private matter.”
Asked whether Bankman-Fried’s bond issue was fair, Sabino said that “$250 million bond issue is a very serious matter” and “I wouldn’t call it a joke.”
He said the reason the bail was so high was “the very real threat of Mr. Bankman-Fried fleeing jurisdiction,” adding that he’s proving problematic given Bankman-Fried’s recent actions have. The potential for him to jet off somewhere outside of the US cannot be ruled out entirely.
“[Sam Bankman-Fried] is just the kind of guy because of his political connections, his resources [and] the fact that he has already spent a lot of time in another jurisdiction. He’s definitely a fugitive.”
Murphy told CoinDesk TV, “The prosecutors wanted to look tough and be able to say, ‘This is the biggest bond anyone has ever seen. It’s quite annoying,'” alluding to why prosecutors acted quickly and negotiated with Bankman-Friend’s attorneys to stop the 30-year-old from fleeing the Bahamas.
However, Bankman-Fried’s bond rules could soon change after a federal prosecutor’s request that would bar Bankman-Fried from using his cell phone and accessing the internet except in certain circumstances. That, Murphy said, came as a shock, adding, “That wasn’t an original condition of his bail.”
“I can’t explain it based on my 30 years of doing this. I’ve never seen anything so forgiving in a situation where someone has millions of victims,” Murphy said. “I don’t know why her [federal prosecutors] Continue to be indulgent as he will push the limits in terms of what he can do.
However, attorney Sabino said that “we tend to be more lenient in our justice system because it’s not a violent crime.”
“Sam Bankman-Fried’s little troubles were unique,” Sabino said, adding that “SBF is damn lucky” to have bail.
