Sam Bankman-Fried Released on $250 Million Bond
FTX founder makes first U.S. court appearance following his extradition from the Bahamas
FTX founder makes first U.S. court appearance following his extradition from the Bahamas
FTX founder Sam Bankman-Fried was released on a $250 million bond Thursday and ordered to detention in his parents’ Palo Alto, Calif., home, after the former executive’s first appearance in a New York federal court following his extradition from the Bahamas.
Mr. Bankman-Fried, charged with engaging in criminal conduct that contributed to the cryptocurrency exchange’s collapse, came to court shackled by the ankles and wearing a charcoal grey suit. He sat quietly at the defence table, flanked by his lawyers.
Mr. Bankman-Fried left the courthouse in a black SUV. At a later date he will enter a plea on charges that he engaged in fraud and other offences, a federal magistrate judge said. The next court hearing is set for Jan. 3.
Magistrate Judge Gabriel Gorenstein set the bail package, which requires Mr. Bankman-Fried to be under electronic monitoring and restricts his travel to parts of northern California and New York.
Assistant U.S. Attorney Nicolas Roos called Mr. Bankman-Fried’s alleged crimes “a fraud of epic proportions” and said he believed the $250 million bond was the largest ever. The judge said the bond would be cosigned by four financially responsible people, including one non-family member.
The evidence against Mr. Bankman-Fried includes the testimony of multiple cooperators and more than a dozen witnesses from FTX and his crypto-trading firm Alameda Research, as well as encrypted text messages and tens of thousands of pages of financial documents, Mr. Roos said.
The government agreed to the bail package, Mr. Roos said, because Mr. Bankman-Fried had consented to extradition. Mr. Bankman-Fried’s financial assets had diminished significantly from when they were worth billions of dollars, he said.
Mark Cohen, a lawyer for Mr. Bankman-Fried, said his client agreed to extradition, which could have taken years, in order to address the charges. He noted Mr. Bankman-Fried would be living with both of his parents, who helped to secure his bond with the equity interest in their home.
Judge Gorenstein said he agreed to the bail package because he believed Mr. Bankman-Fried wasn’t a flight risk and didn’t pose a danger to the community.
“It will be very difficult for this defendant to hide without being recognised,” the judge said. Mr. Bankman-Fried had achieved such notoriety that it would be impossible for him to conduct any financial transactions, the judge added.
When the judge asked if Mr. Bankman-Fried understood that he could be charged with bail jumping if he failed to appear in court, he looked at his lawyers then said, “Yes, I do.”
Mr. Bankman-Fried has acknowledged making mistakes while running the company, but has denied committing fraud.
His appearance caps a dramatic series of legal developments that began when Mr. Bankman-Fried told a Bahamas judge Wednesday morning that he wanted to be transferred immediately to the U.S. to face charges and try to “make the relevant customers whole.”
After U.S. officials had him on a plane en route to New York on Wednesday night, they announced that two of his closest associates had pleaded guilty to several criminal offences and were cooperating with prosecutors.
Caroline Ellison, the former chief executive of Alameda Research, pleaded guilty to seven criminal counts, and former FTX Chief Technology Officer Gary Wang to four counts, according to their plea agreements. Their cooperation with investigators likely strengthens prosecutors’ case against Mr. Bankman-Fried, who is accused of defrauding customers, lenders and investors. It could also increase the legal peril facing other former FTX officials who played a role in the alleged scheme, as prosecutors have two insiders’ accounts and documents upon which they could rely at any future trials.
According to documents made public Thursday, Ms. Ellison and Mr. Wang pleaded guilty to participating in a scheme to defraud FTX customers from 2019 through November 2022 by misappropriating customer deposits and lending them to Alameda. Ms. Ellison also admitted participating in a scheme to defraud Alameda lenders by providing false information about its financial condition. She and Mr. Wang also pleaded guilty to misleading FTX investors.
Manhattan U.S. Attorney Damian Williams said in a video statement Wednesday that the investigation into FTX is ongoing. He urged anyone who participated in misconduct at FTX or Alameda to come forward soon.
A lawyer for Ms. Ellison declined to comment after her guilty plea was announced. A lawyer for Mr. Wang said his client took his obligations as a cooperating witness seriously.
Both Ms. Ellison, 28 years old, and Mr. Wang, 29, have ties to Mr. Bankman-Fried that predate his founding of FTX. Ms. Ellison and Mr. Bankman-Fried worked together at Jane Street, a quantitative-trading firm, and were once romantically involved. Mr. Wang and Mr. Bankman-Fried were in the same coed living group at the Massachusetts Institute of Technology.
The Securities and Exchange Commission and Commodity Futures Trading Commission also filed lawsuits against Ms. Ellison and Mr. Wang late Wednesday for their roles in a scheme to defraud FTX investors. Both agreed to settle the SEC’s and CFTC’s claims and to accept liability, according to the regulators.
Mr. Bankman-Fried is also charged with conspiring with others to make illegal campaign contributions. Mr. Williams said Mr. Bankman-Fried made political contributions look like they were coming from wealthy associates when in reality they were funded by Alameda with money from stolen customer funds.
Mr. Bankman-Fried personally donated $40 million to political campaigns and committees—mostly to Democrats and liberal-leaning groups.
FTX’s new management has said it would try to recoup campaign contributions made by Mr. Bankman-Fried and other FTX executives to pay back creditors.
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Gold is outshining stocks, bonds and crypto. Here’s what’s driving the surge—and how to get in.
Give gold bugs their due. The yellow metal has been a light in the investing darkness. At a recent $3,406 per troy ounce, it’s up 30% this year, to the envy of stock, bond, and Bitcoin holders. Cash-flow purists will call this a flash in the pan, but they should look again. Over the past 20 years, SPDR Gold Shares , an exchange-traded fund, has surged 630%—85 points more than SPDR S&P 500 , which tracks shares of the biggest U.S. companies.
That isn’t supposed to happen. If businesses couldn’t be expected to outperform an unthinking metal over decades, shareholders would demand that they cease operations and hoard bullion instead. So, what’s going on? If this were gasoline or Nike shoes or Nvidia chips, we would look to supply versus demand. With immutable gold, nearly every ounce that has ever been found is still around somewhere, so price action is mostly about demand. That has been ravenous and broad since 2022.
That year, the U.S. and dozens of allies placed sweeping sanctions on Russia, including its largest banks, and China went on a bullion spree. Its buying has since cooled, but other central banks have stepped in. Perhaps this is unsurprising, in light of a decades-long diversification by finance ministers away from the U.S. dollar, which is down to 57% of foreign reserves from over 70% in 2000. But the recent uptick in gold stockpiling looks to JPMorgan Chase , the world’s largest bullion dealer, like a debasement trade. Investors are nervous about President Donald Trump’s tariffs, his browbeating of the Federal Reserve Chairman over interest rates, and blowout U.S. deficits.
It isn’t just bankers. Demand among individuals for gold bars and coins has been surging, with some dealers experiencing sporadic shortages. Gold ETFs were bucking the trend, but flows there have turned solidly positive since last summer, including recently in China. All told, there is now an estimated $4 trillion worth of gold held by central banks, and $5 trillion by private investors. Calculated against $260 trillion for all financial assets, including stocks, bonds, cash, and alternatives, that works out to a global gold portfolio allocation of 3.5%, a record.
What’s next? BofA Securities says that central banks have room for much more gold buying, and that China’s insurance companies are likely to dabble, too. RBC Capital Markets analyst Chris Louney says ETFs could drive demand growth from here, especially if angst reigns. “Gold is that asset of last resort…the part of the investing universe that investors really look for when they have a lot of questions elsewhere,” he says.
Russ Koesterich, a portfolio manager for BlackRock , a major player in ETFs including the iShares Gold Trust , says that gold has proven itself as a store of value, and deserves a 2% to 4% weighting for most investors. “I think it’s a tough call to say, ‘Would you chase it here?’ ” he says. “There have been some pullbacks. Those might represent a good opportunity, particularly for people who don’t have any exposure.”
Daniel Major, who covers materials stocks for UBS , points out that gold miners mostly haven’t wrapped themselves in glory in recent years with their dealmaking and asset management. As a result, a major index for the group is trading 30% below pre-Covid levels relative to earnings. UBS increased its 2026 gold price target by 23%, to $3,500 per troy ounce, before gold’s latest lurch higher. Many miners are producing at a cost of $1,200 to $2,000. Major has bumped up earnings estimates across his coverage. “I think we’re gonna see further upward revisions to consensus earnings,” he says. “This is what’s attractive about the gold space right now.”
Major’s favorite gold stocks are Barrick Gold , Newmont , and Endeavour Mining . More on those in a moment. We also have thoughts on how not to buy gold—and what not to expect it to do: Don’t count on it to keep beating stocks long term, or to provide precise short-term protection from inflation spikes and stock swoons. But first, a little history, chemistry, and rules of the yellow brick road.
The first gold coins of reliable weight and purity featured a lion and bull stamped on the face, and were minted at the order of King Croesus of Lydia, in modern-day Turkey, around 550 B.C. But by then, gold had been used as a show of riches for thousands of years. Ancient Egyptians called gold the flesh of the gods, and laid the boy King Tutankhamen to rest in a gold coffin weighing 243 pounds. The Old Testament says that under King Solomon, gold in Jerusalem was as common as stone. Allow for literary license; silicon, an element in most stones, is 28.2% of the Earth’s crust, whereas gold is 0.0000004%.
Marco Polo described palace walls in China covered with gold. Mansa Musa I of Mali in West Africa, on a pilgrimage to Mecca in 1324, is said to have splashed so much gold around Cairo on the way that he crashed the local price by 20%, and it took 12 years to recover. To Montezuma, the Aztec king whose gold lured Cortés from Spain, the metal was called, as it still is by some in Central Mexico, teocuitlatl —literally, god excrement. Golden eras, gold medals, the Golden Rule, and golden calf—so deep is the historical association between gold and wealth, excellence, and vice that it seems to have a mystical hold on humanity. In fact, it’s more a matter of chemical inevitability.
Trade and savings are easier with money. Pick one for the job from the 118 known elements. Years ago on National Public Radio, Columbia University chemist Sanat Kumar used a process of elimination. Best to avoid elements that are cumbersome gases or liquids at room temperature. Stay away from the highly reactive columns I and II on the periodic table—we can’t have lithium ducats bursting into flame. Money should be rare, unlike zinc, which pennies are made from, but not too rare, unlike iridium, used for aircraft spark plugs. It shouldn’t be poisonous like arsenic or radioactive like radium—that rules out more elements than you might think. Of the handful that are left, eliminate any that weren’t discovered until recent centuries, or whose melting points were too high for early furnaces.
That leaves silver and gold. Silver tarnishes, but rarer, noble gold holds its luster. It is malleable enough to pound into sheets so thin that light will shine through. And, despite the best efforts of Isaac Newton and other would-be alchemists, it cannot be artificially created—profitably, anyhow. Technically, there is something called nuclear transmutation. If you can free a proton from mercury’s nucleus or insert one into platinum’s, you’ll end up with a nucleus with 79 protons, and that’s gold. Scientists did just that more than 80 years ago using mercury and a particle accelerator. But what little gold they produced was radioactive. If you think you can do better, you’ll likely need a nuclear reactor to prove it, but a large gold mine is one-fifth the cost, and we have to believe the permitting is easier.
We passed over copper due to commonness, but it has become too valuable to use for pennies. The 95% copper content of a pre-1982 penny is worth about three cents today. The equivalent amount of silver goes for $3.10, and gold, more than $320. But the three trade in different units. A pound of copper is up 17% this year, at $4.72. Silver and gold are typically quoted per troy ounce, a measure of hazy origin and clear tediousness, which is 9.7% heavier than a regular ounce. A troy ounce of silver is $32.70, up 13% this year.
Confused? This won’t help: The purity of investment gold, called its fineness, is measured in either parts per thousand or on a 24-point karat scale. A karat is different from a carat, the gemstone weight, but our friends in the U.K.—who adopted troy ounces in the 15th century—often spell both words with a “c.” Gold bricks like the ones central banks swap are called Good Delivery bars, and weigh 400 troy ounces, give or take, worth more than $1.3 million. If you buy a few, lift with your legs; each weighs a little over 27 regular pounds (as opposed to troy pounds, which, it pains us to note, are 12 troy ounces, not 16).
There are many options for smaller players, like Canadian Maple Leaf coins, which are 24-karat gold; South African Krugerrands, at 22 karats, and alloyed with copper for durability; and Gold American Eagles, 22 karats, with some silver and copper. Proof coins cost extra for their high polish, artistry, and limited runs, and may or may not become collectibles. Humbler-looking bullion coins are bought for their metal value. Prefer the latter if you aren’t a coin hobbyist. Avoid infomercials and stick with high-volume dealers. Even so, markups of 2% to 4% are common. Costco Wholesale , which sells gold in single troy ounce Swiss bars, charges 2%, but often runs out, and limits purchases to two bars per member a day. Factor in the cost of storage and insurance, too.
ETFs are more economical. For example, iShares Gold Trust costs 0.25%, not counting commissions. For long-term holders, as opposed to traders, there is a smaller fund called iShares Gold Trust Micro , which costs 0.09%.
Resist fleeing stocks for gold. The surprisingly long outperformance of gold is mostly a function of its recent run-up. From 1975 through last year, gold turned $1 invested into about $16, versus $348 for U.S. stocks. That starting point has a legal basis. President Franklin Roosevelt largely outlawed private gold ownership in 1933; President Richard Nixon delinked the dollar from gold in 1971; and President Gerald Ford made private ownership legal again at the end of 1974.
Gold has been a so-so inflation hedge over the past half-century, and at times a disappointing one. In 2022, when U.S. inflation peaked at a 40-year high of over 9%, the gold price went nowhere. The problem is that high inflation can prompt a sharp increase in interest rates. “If people can clip a 5% coupon on a T-bill, often they’d prefer to do that than have either a lump of metal or an ETF that doesn’t produce cash flow,” says BlackRock’s Koesterich.
Likewise, while gold has generally offset stock declines this year, it hasn’t always done so in the heat of the moment. Recall tariff “liberation day” early this month, which sent U.S. stocks down close to 11% in three days and pulled gold down nearly 5%. “This isn’t an uncommon scenario,” says RBC’s Louney. “When investors were losing elsewhere in their portfolio, gold was sold as well to cover those losses.”
Our top tip on how gold behaves is this: It doesn’t. People do the behaving, and they are appallingly unreliable. Use bonds as a stock market hedge. If they don’t work, fall back to patience. For inflation protection, think of assets that are a better match than gold for the goods and services that you buy every week. A diversified commodities fund has precious metals but also industrial ones, along with energy and grains. Treasury inflation-protected securities are explicitly linked to the consumer price index, which measures inflation for a theoretical individual whose buying patterns differ from your own, but are close enough.
Own a house. Stick with a workaday, reliable car. Yes, cars deteriorate. But so does nearly everything on a long enough timeline. Rely mostly on stocks, which represent businesses, which wouldn’t endure if they couldn’t turn raw inputs like commodities into something more profitable. There’s even a miner, Newmont, in the S&P 500.
Speaking of which, UBS’ Major recently upgraded both Canada’s Barrick and Denver-based Newmont from Neutral to Buy. “Both very much fall into that category of having a challenging recent track record,” he says. Newmont has lost 20% over the past three years while gold has gained 76%, which Major blames on difficult acquisitions and earnings shortfalls. Barrick, down 8%, has been in a dispute with Mali since 2023, when its government instituted a new mining code that gives it a greater share of profits. In recent days, authorities have shut the company’s offices in the capital city of Bamako over alleged nonpayment of taxes.
These are the sort of headaches that Krugerrands in a safe don’t produce. But Major calls expectations “adequately reset,” free cash flow attractive, and guidance achievable. Newmont, at 13 times next year’s earnings consensus, is selling assets, and Barrick, at 10 times, has healthy production growth.
Major also likes London-based, Toronto-listed Endeavour Mining , up 40% over the past three years and trading at nine times earnings, although he says it has “higher jurisdictional risk.” It is focused on West Africa, especially Burkina Faso, which had a coup d’état in 2022. You’d think the stock would be doing worse amid such political upheaval. Then again, Burkina Faso since 1966 has had eight coups, five coup attempts, and one street ousting of a president who tried to change the constitution to remain in power. That works out to an uprising every four years, on average.
Montezuma’s scatological name for gold might have been prescient, considering the sometimes-odious consequences for small countries that find it.
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