FTX founder Sam Bankman-Fried flies to New York after court chaos

FTX co-founder Sam Bankman-Fried is escorted by correctional officers to the District Courthouse in Nassau, Bahamas, on December 21, 2022.

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Sam Bankman-Fried is flying to New York on Wednesday night, according to the Bahamas Attorney General’s office, where he is later scheduled to face arraignment in a US federal court, ending a days-long saga.

Bankman-Fried, 30, was arraigned December 30 in federal court in New York. 9 and arrested three days later by Bahamas law enforcement at the request of US prosecutors.

His attorney, Jerone Roberts, reading from an affidavit issued on 12/20, told the court Bankman-Fried consented to the extradition in part because she had “a desire to cure the clients involved.” Bankman-Fried was “eager to leave,” Roberts told the court.

It’s unclear how his return would help plug the $8 billion balance sheet hole that federal complaints say was the result of risky trades and extravagant spending by FTX executives.

Bankman-Fried faces charges and bail after landing. Unlike other economic cases, however, Bankman-Fried faces unique challenges.

“This is obviously not a typical case,” former federal prosecutor Renato Mariotti told CNBC. “He faces decades in prison. And he has no ties to the SDNY community like a typical defendant would, and he also has ties to a foreign jurisdiction. So prosecutors have a chance of getting the judge to order the detention unless the defendant posts property or substantial cash bail.”

Throughout the extradition nullification process, Bankman-Fried’s legal team in the Bahamas and US attorneys appeared at odds. His legal team initially said it would fight extradition attempts, but on Saturday, a person familiar with the matter told CNBC that the crypto billionaire had changed his mind and would be returning to the United States.

On Monday morning, Bankman-Fried’s attorney in the Bahamas said the former billionaire would not return to the United States without seeing a copy of his indictment, with the attorney telling a Bahamas judge he was “shocked,” Bankman said -Fried ever seen in court.

Chaos ensued as reporters and attorneys for Bankman-Fried tried to find out if the former crypto billionaire would be brought back to the United States for arraignment in federal court.

Finally, on Tuesday, a Bahamas prison official and a source familiar with the matter confirmed that Bankman-Fried had signed the extradition paperwork and would be appearing in Nassau for his final hearing on Thursday.

When Bankman-Fried landed in New York, the previously atypical procedure was to take on a more familiar tenor. In a typical federal case, the defendant “would be transferred to the detention center for retrial prior to the first hearing/indictment,” Braden Perry, former CFTC trial attorney and Kennyhertz Perry’s partner, told CNBC.

“But again, if agreed in advance with the judge in charge of the detention hearing, the court may allow a pre-processing hearing, but that is unlikely. His lawyers could also forego the hearing for the time being, at least for the time being, and request another detailed evidentiary hearing to ensure their best arguments are presented with the proper evidence for incarceration, as getting out before trial is usually a once-in-a-lifetime chance.” continued Perry.

Bankman-Fried is accused by federal law enforcement and financial regulators of what the SEC called one of the largest and “boldest” fraud attempts in recent memory. Replacement CEO John J. Ray described a “complete failure of corporate control” at the company.

Federal regulators have claimed Bankman-Fried used $8 billion in client assets for extravagant real estate purchases and vanity projects, including stadium naming rights and millions in political donations.

CNBC’s Kate Rooney contributed to this report.

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