Sam Bankman-Fried, the disgraced cryptocurrency executive, is set 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 scam that collapsed last month its crypto exchange culminated , FTX.
In the United States, Mr. Bankman-Fried, 30, has been accused of using his clients’ FTX deposits to make lavish property purchases, invest in other companies and donate funds to politicians. Mr. Bankman-Fried was arrested at his luxury apartment complex in the Bahamas last Monday. After being held in a police cell overnight, he was denied bail by a judge in the Bahamas on Tuesday and was transferred to the island’s notorious Fox Hill prison.
In court Tuesday, Mr. Bankman-Fried said he would not waive his right to contest extradition. But after a few days in detention, he is now inclined to agree to extradition, although his decision could change, according to the person inside the matter, who requested anonymity to discuss sensitive legal advice. He is expected to present his new position at a court hearing as early as Monday, the person said.
An extradition prepares legal drama in the United States that will probably last for months. On Tuesday, prosecutors for the Department of Justice’s Southern District of New York unveiled a 13-page indictment alleging Mr. Bankman-Fried with eight counts, including wire fraud against customers and lenders and conspiracy to defraud the United States.
Following his extradition to the United States, Mr. Bankman-Fried will face arraignment in federal court in Manhattan and a new bail hearing.
What you should know about the FTX collapse
What is FTX? FTX is a now bankrupt company that was one of the world’s largest cryptocurrency exchanges. It allowed customers to exchange digital currencies for other digital currencies or traditional money; It also had a native cryptocurrency called FTT. The Bahamas-based company built its business on risky trading options that are not legal in the United States.
After the charges were filed, Mark Cohen, an attorney for Mr. Bankman-Fried, said his client was “reviewing the charges with his legal team and considering all of his legal options.”
The news that Mr. Von Bankman-Fried was expected to agree to extradition, Reuters first reported.
The collapse of FTX was an extraordinary fall for Mr. Bankman-Fried, a crypto celebrity who testified before Congress and spearheaded efforts to mainstream the technology.
He founded FTX in Hong Kong but relocated the company to the Bahamas in late 2021, capitalizing on the country’s friendly regulatory stance towards crypto. He also aggressively marketed the company in the United States: his face plastered in ads, and he rubbed the shoulders of actors and star athletes, cultivating a reputation as a hard-working do-gooder who intended to donate his vast fortune to charity. For a time, he was widely considered the second richest mogul in the crypto industry.
Even as other crypto firms struggled this year, FTX was seen as a responsible company in a free-wheeling, loosely regulated industry. That changed in early November when a deposit rush exposed an $8 billion hole in the company’s accounts, forcing the exchange to file for bankruptcy on Nov. 11. 11. Its collapse has rocked the industry, sending crypto prices skyrocketing and forcing another major crypto company, 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 specializing in restructuring troubled companies. In bankruptcy filings and testimony before Congress, Mr. Ray has accused Mr. Bankman-Fried’s management speaks of a “complete failure of corporate control.”
In the early 2000s, Mr. Ray oversaw the winding-up of Enron, the energy trading company that collapsed in an accounting scandal. But he said in a court filing that the chaos at FTX was the worst he had ever seen.
Having been refused bail in the Bahamas, Mr. Bankman-Fried has been held in a room with five other people at Fox Hill Correctional Facility in Nassau, the country’s capital.
The prison, known locally as “Fox Hell,” has been widely criticized for its harsh conditions. According to former prisoners, family members of inmates and a US State Department report, the prison has little running water, guards beatings are common and inmates sometimes defecate in buckets.
The aftermath of FTX’s demise
The sudden collapse of the crypto exchange has left the industry stunned.
Sean Hall, a former Fox Hill prisoner who was released last year, said he was briefly held in the maximum security prison, where he was crammed with five other inmates into a cell no wider than his wingspan. They slept on metal bunk beds with no mattresses, he said, and woke up with bug bites.
“It’s not a condition of life for any kind of living thing,” said Mr. Said Halle.
Doan Cleare, the prison’s chief administrator, declined to allow a New York Times reporter and photographer on the prison grounds. He would not give many details about Mr. Bankman-Fried’s condition, other than that the FTX founder was at the medical facility for unspecified reasons. He described the medical facility as a “dormitory-style apartment.”
“There is no preferential treatment,” Mr. Cleare said, noting that the prison is being renovated to improve conditions.
Mr. Bankman-Fried’s parents, Stanford Law School professors Joe Bankman and Barbara Fried, visited the jail Thursday and removed clothing and medication, a person familiar with the matter said.
They also have money in Mr. Bankman-Fried’s commission account, Mr. Cleare said, but they haven’t been allowed to see their son.
Royston Jones Jr. and Amanda Holpuch contributed reporting.