FTX Collapse: Bankman-Fried May Be Extradited on December 21

The co-founder of the bankrupt cryptocurrency exchange has agreed to his extradition.

Sam Bankman-Fried facing American regulators: the scenario that still seemed unlikely a few days ago is now a reality. 

The founder of the cryptocurrency exchange FTX and its sister company Alameda Research will land in the United States on December 21 to answer charges of fraud and conspiracy to defraud against FTX clients and investors filed by the American regulators.

Bankman-Fried lives in the Bahamas where FTX is also headquartered.

The disgraced crypto king has signed the necessary papers to turn himself in to U.S. authorities, Bahamas Acting Commissioner of Corrections Doan Cleare told media. 

Bankman-Fried, known in crypto circles as SBF, is expected to separately sign other papers to finalize his decision not to challenge his extradition to the United States in the Magistrate’s Court in Nassau on December 21.

End of a Chapter?

Thereafter, he will be handed over to FBI agents and will fly to the United States in a non-commercial plane, reports Bloomberg News. It has not yet been revealed where he would land in the United States. 

But if all goes according to plan, Bankman-Fried’s arrival in the US a week after regulators filed a series of criminal and civil charges against him following the bankruptcy of his crypto empire closes a chapter in a saga which has been shaking the crypto industry for over a month now.

It all started on November 6 when Changpeng Zhao, or CZ, rival of SBF and founder of the cryptocurrency exchange Binance, announced that his group would sell its FTT, a cryptocurrency issued by FTX. The reason given by CZ was that he had doubts about the balance sheet of Alameda, the hedge fund that is also a trading platform, founded by SBF.

The announcement, made on Twitter, provoked a run on the bank from FTX customers asking to withdraw their funds in the form of cryptocurrencies. SBF said on November 7 that the assets were “fine,” but it was too late. 

On November 8, he announced that he had reached an agreement with CZ to sell him his empire. But the next day CZ backtracked and indicated to abandon the deal because the financial situation of FTX and Alameda was more disastrous than expected. 

SBF tried to find another savior but would end up filing for Chapter 11 bankruptcy on November 11. He resigned and was replaced by John Ray, the liquidator of  the energy broker Enron.

Since then, there have been startling revelations about the Bankman-Fried regime that have been piling up from Ray and especially from regulators who are investigating to determine what caused the bankruptcy in a few days of FTX which was still valued at $32 billion in February.

‘Massive Yearslong Fraud’

On December 13, U.S. regulators — the Department of Justice, the U.S. Securities and Exchange Commission or SEC and the Commodity Futures Trading Commission or CFTC — filed a series of criminal and civil charges against the former trader.

Justice Department prosecutors filed eight criminal counts against Bankman-Fried, according to the indictment unsealed on Dec. 13. Four of the charges, including conspiracy to commit wire fraud on customers and lenders and wire fraud, indicate that the alleged acts began at least in 2019. That was the year FTX was created.

“From at least in or about 2019, up to and including in or about November 2022,” Bankman-Fried “and others known and unknown, willfully and knowingly did combine, conspire, confederate, and agree together and with each other to commit wire fraud,” prosecutors within the U.S. Department of Justice’s Southern District of New York alleged.

“Bankman-Fried was orchestrating a massive, yearslong fraud, diverting billions of dollars of the trading platform’s customer funds for his own personal benefit and to help grow his crypto empire,” the S.E.C. alleges in its civil complaint.

He used customer funds to “make undisclosed venture investments, lavish real estate purchases, and large political donations,” the complaint said.

Mark Cohen, an attorney for Bankman-Fried, said his client “is reviewing the charges with his legal team and considering all of his legal options.”

Initially Bankman-Fried was considering contesting his extradition. A hearing to that effect had been set for February 8, 2023, but he recently changed his mind. According to numerous media reports, it was the conditions in the Bahamian prison where he was incarcerated that led him to change his mind.

He will now respond to the allegations in person. 

The fall of FTX has already caused $9 billion in losses to customers of the cryptocurrency exchange, according to Chainalysis. But this number doesn’t take into account potential losses for people who deposited they funds with the exchange, as the likelihood of recovering them is unknown.

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