January 28, 2023

EXCLUSIVE: Sam Bankman-Fried overturns extradition appeal

EXCLUSIVE: Sam Bankman-Fried overturns extradition appeal

(Reuters) – Former FTX CEO Sam Bankman Fried is expected to appear in court in the Bahamas on Monday to overturn his appeal against his extradition to the United States, where he faces fraud charges, a person familiar with the matter said. on Saturday.

The 30-year-old cryptocurrency mogul was indicted in Manhattan federal court on Tuesday and accused of engaging in a scheme to defraud FTX clients by using billions of dollars in stolen deposits to pay expenses and debts and to make cryptocurrency hedge investments. Fund, Alameda Research LLC.

His decision to agree to extradition will pave the way for him to appear in a US court to face wire fraud, money laundering and campaign finance charges.

He will likely be held at the Metropolitan Detention Center in Brooklyn, defense attorney Zachary Margolis-Onuma said upon his arrival in the United States, although some federal defendants are being held in prisons outside New York City due to overcrowding in the facility. .

At the preliminary court hearing in Manhattan, Bankman-Fried will be required to enter a petition and the judge will decide whether to grant him bail, Margolis Onuma said. The attorney added that this hearing must take place within 48 hours of Bankman-Fried’s arrival in the United States, although it is likely to happen sooner.

Prosecutors will likely argue that Bankman-Fried is a flight risk and should remain in custody because of the large sums of money involved in the case and the unclear location of those funds.

“The missing money gives prosecutors a strong argument that he is a flight risk,” said former federal prosecutor and defense attorney Michael Weinstein. “I would expect that if the judge agreed to release before trial, they would impose very restrictive and onerous conditions.”

Legal experts told Reuters any trial would likely take more than a year.

A Bankman-Fried spokesperson and a US-based attorney for Bankman-Fried did not immediately respond to requests for comment. Bankman-Fried acknowledged the failure of risk management at FTX but said he did not believe he had criminal liability.

A spokesperson for the US Attorney’s Office in Manhattan declined to comment.

The largest financial fraud in American history

It was not immediately clear what prompted Bankman Fried to change its mind and decide not to contest the extradition.

On Tuesday, he was returned to Fox Hill Prison in the Bahamas after Chief Judge Joy Ann Ferguson-Pratt denied his request to stay home pending an extradition hearing.

The US State Department said in a 2021 report that conditions at Fox Hill were “harsh,” citing overcrowding, a rodent infestation, and prisoners’ reliance on buckets as toilets. Authorities there say conditions have improved since then.

Bankman-Fried has amassed a fortune estimated at over $20 billion as he rode the cryptocurrency boom to build FTX on one of the largest exchanges in the world. His arrest last Monday in the Bahamas, where he lives and where FTX is headquartered, came just a month after the stock market crashed amid a wave of customer withdrawals.

Manhattan’s top federal prosecutor, Damien Williams, called the collapse of FTX one of the “largest financial frauds in American history.” He described the bureau’s investigation as ongoing, and urged people with knowledge of wrongdoing at FTX or Alameda to cooperate.

A senior FTX executive, Ryan Salameh, told securities regulators in the Bahamas on Nov. 9 that assets belonging to the exchange’s clients had been transferred to Alameda to cover the hedge fund’s losses, according to a document made public as part of FTX’s Delaware bankruptcy proceedings.

FTX declared bankruptcy on November 11, the same day Bankman-Fried stepped down as CEO.

Salameh’s lawyer did not immediately respond to a request for comment.

Reporting by Jasper Ward. Additional reporting by Luke Cohen and Jack Quinn. Writing by Luke Cohen; Editing by Chizu Nomiyama, Chris Reese, Amy Stevens and Jonathan Otis

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