Sam Bankman-Fried, the disgraced cryptocurrency executive, is expected to agree to extradition to the United States, according to a person briefed on the matter, as he faces charges of orchestrating a years-long fraud that culminated last month the collapse of its crypto exchange. , FTX.
In the United States, 30-year-old Bankman-Fried has been accused of using his clients’ FTX deposits to make lavish real estate purchases, invest in other businesses and donate money to politicians. Mr Bankman-Fried was arrested last Monday at his luxury apartment complex in the Bahamas. After being held in a police cell overnight, he was denied bail by a judge in the Bahamas on Tuesday and transferred to the island’s notorious Fox Hill Prison.
In court, Mr. Bankman-Fried Tuesday that he would not waive his right to challenge the extradition. But after a few days in jail, he is now inclined to agree to extradition, although his decision could still change, according to the person who was briefed on the case, who asked for anonymity to discuss sensitive legal deliberations. He is expected to announce his new position at a court hearing as early as Monday, the person said.
An extradition sparks what is likely to be a months-long legal drama in the United States. On Tuesday, prosecutors from the Justice Department’s Southern District of New York unsealed a 13-page criminal indictment indicting Mr. Bankman-Fried on eight counts, including bank fraud against customers and lenders, as well as conspiracy to defraud the United States. to cheat.
Once transferred to the United States, Mr. Bankman-Fried is being charged in federal court in Manhattan and will again be heard on bail.
What you need to know about the collapse of FTX
What is FTX? FTX is a now-bankrupt company that used to be one of the world’s largest cryptocurrency exchanges. It enabled customers to trade digital currencies for other digital currencies or traditional money; it also had a native cryptocurrency known as FTT. Based in the Bahamas, the company built its business on risky trading options that are not legal in the United States.
After the charges were filed, Mark Cohen, a lawyer for Mr Bankman-Fried, said his client “reviewed the charges with his legal team and considered all of his legal options”.
News that Mr Bankman-Fried was expected to agree to extradition was first reported by Reuters.
The collapse of FTX was an extraordinary downfall for Mr. Bankman-Fried, a crypto celebrity who testified before Congress and led the way in an effort to mainstream the technology.
He founded FTX in Hong Kong, but moved the company to the Bahamas in late 2021, taking advantage of the country’s friendly regulatory stance on crypto. He also aggressively marketed the company in the United States: His face was plastered on advertisements and he rubbed shoulders with actors and star athletes, earning a reputation as a hard-working do-gooder who intended to donate his vast wealth to charity. to donate. For a while, he was widely believed to be the second richest crypto industry tycoon.
Even as other crypto companies struggled this year, FTX was seen as a responsible company in a free-running, loosely regulated industry. That changed in early November, when a run on deposits revealed an $8 billion hole in the company’s accounts, forcing the stock exchange to file for bankruptcy on Nov. 11. company, the lender BlockFi, to file for bankruptcy.
Mr. Bankman-Fried resigned on the day of FTX’s bankruptcy filing. He was replaced by John Jay Ray III, a lawyer who specializes in restructuring troubled companies. In bankruptcy filings and congressional testimony, Mr. Ray has sharply criticized Mr. Bankman-Fried’s management, calling it a “complete failure of company control.”
In the early 2000s, Mr. Ray oversaw the dissolution of Enron, the energy trading firm that collapsed in an accounting scandal. But he said in a lawsuit that the mess at FTX was the worst he’d ever seen.
Since being denied bail in the Bahamas, Mr. Bankman-Fried was held at Fox Hill Correctional Center in Nassau, the nation’s capital, in a room with five other people.
The prison, known to locals as “Fox Hell”, has been widely criticized for its harsh conditions. Running water in the prison is scarce, beatings by guards are common and inmates sometimes defecate in buckets, according to former inmates, inmates’ relatives and a report from the US State Department.
The aftermath of FTX’s demise
The sudden collapse of the crypto exchange has stunned the industry.
A former Fox Hill inmate released last year, Sean Hall, said he was briefly confined in maximum security, where he was crammed into a cell no wider than his wingspan with five other inmates. They slept on metal bunk beds with no mattresses, he said, and woke up covered in insect bites.
“It’s not a condition of life for any living thing,” Mr. Hall said.
Doan Cleare, the prison’s chief administrator, refused to allow a New York Times reporter and photographer to enter the prison grounds. He would not give many details about Mr. Bankman-Fried’s condition, except that the founder of FTX was in the medical facility for reasons that could not be specified. He described the medical facility as an “apartment in dorms.”
“There is no preferential treatment,” Mr Cleare said, noting that the prison is undergoing renovations to improve conditions.
Mr. Bankman-Fried’s parents, Stanford Law School professors Joe Bankman and Barbara Fried, visited the jail on Thursday to drop off clothes and medicines, according to a person familiar with the case.
They also deposited money into Mr Bankman-Fried’s commissioner’s account, Mr Cleare said, but were not allowed to see their son.
Royston Jones, Jr. and Amanda Holpuch contributed reporting.
