Michael Lacey, co-founder of the controversial classified advertising website Backpage.com, has been released on $1 million bail as he appeals his conviction for international concealment money laundering. Lacey’s release follows a ruling by the United States Court of Appeals for the 9th Circuit, which found that his appeal raises a “substantial question” of law that could lead to a reversal of his conviction.

Lacey, who was sentenced in August to five years in prison and fined $3 million by U.S. District Judge Diane Humetewa, had been in federal custody since September 11. His appeal challenges the sole count on which he was convicted, arguing that the 2017 transfer of money to Hungary—central to the charge—lacked concealment. Lacey asserts that he filed timely notices with the government and paid all relevant taxes.

The 9th Circuit ruled in favor of Lacey’s bail, stating that his appeal raised debatable legal issues that could potentially overturn his conviction. The court emphasized that Lacey is not likely to flee or pose a danger to the community. However, the same court denied similar requests from co-defendants Scott Spear and John Brunst, who each face 10-year sentences and are appealing multiple convictions.

Judge Humetewa, who presided over Lacey’s trial, set the bail amount at $1 million. A hearing on the conditions of his release is scheduled for December 2.

The federal prosecution of Backpage and its executives began in 2018, with the Justice Department accusing the platform of facilitating prostitution. Lacey and his co-defendants faced a total of 86 counts, including charges related to money laundering and conspiracy. A jury acquitted Lacey of 86 counts, convicted him of one, and deadlocked on 34 others. Humetewa declared a mistrial on the unresolved charges, leaving open the possibility of a retrial.

Lacey’s case has been fraught with controversy, with critics labeling it a civil liberties issue. Free speech advocates argue that the prosecution of Backpage conflates legal online activity with illegal acts. Elizabeth Nolan Brown of Reason called Lacey’s prosecution a “civil liberties nightmare.”

The case has spotlighted tensions between free speech protections and efforts to combat illicit activities online. Backpage, once a dominant platform for classified ads, was shuttered in 2018 after federal authorities seized its assets. Prosecutors likened Lacey to a “drug kingpin,” accusing him of running a criminal enterprise. Lacey and his supporters contend that Backpage operated within legal boundaries and cooperated with law enforcement to address illicit listings.

The 9th Circuit’s decision to grant Lacey bail suggests a recognition of the complex legal issues underpinning his case. The appeal raises questions about the evidence presented at trial and whether it sufficiently proved concealment in financial transactions.

Lacey’s release comes as the appeals process continues for his co-defendants, with no immediate resolution in sight. Meanwhile, federal prosecutors have signaled their intent to retry Lacey on the 34 unresolved counts but have deferred action pending the outcome of the appeals process.

The case has also been marred by personal tragedy. Lacey’s business partner and fellow Backpage co-founder Jim Larkin died by suicide last year before the trial began, highlighting the immense pressure faced by those involved.

Lacey’s conditional release marks a pivotal moment in a case that has drawn national attention and sparked debates about internet freedom and criminal liability.