Disgraced cryptocurrency mogul Sam Bankman-Fried is set to return to the United States on Wednesday night to face criminal charges after dropping his objection to extradition from the Bahamas.
Bankman-Fried, dressed in a blue suit, affirmed to the judge that he would forgo a formal process. His local defense lawyer added that the former executive is “anxious to leave” the Bahamas, according to Reuters. The onetime crypto mogul is expected to return to the United States on Wednesday night, the Bahamian attorney general said in a statement.
Federal prosecutors last week announced eight criminal charges against Bankman-Fried, including fraud, conspiracy, money laundering and campaign finance violations. They allege that he defrauded investors and diverted billions of dollars in FTX customer money to his hedge fund, which he then used as a piggy bank to fund a lavish lifestyle, risky personal investments and political donations. His extradition could expedite resolution of the criminal and civil cases that the U.S. government is pursuing, according to legal experts.
It is not clear yet when Bankman-Fried will arrive in the United States and how he will plead in his first U.S. court appearance. But in a blitz of public appearances since FTX’s collapse last month, he has said he never intended to commit fraud and was largely unaware of what was going wrong at the companies he owned and controlled.
The Securities and Exchange Commission and the Commodity Futures Trading Commission are also bringing civil charges against Bankman-Fried. Those suits are likely to take a back seat while the criminal case proceeds, legal experts said.
Customers and investors who are owed money from FTX got a sliver of encouragement Tuesday. The company announced that an unspecified number of parties that received payments or contributions from FTX or Bankman-Fried have expressed an interest in returning the money. It offered guidance for others who would like to voluntarily give back funds — and a warning for those who don’t, saying it will start a bankruptcy court process to force repayments, including interest.
Bankman-Fried’s homecoming marks another bitter reckoning for a figure who until just months ago sat atop an estimated $16 billion personal fortune, now vaporized. Bankman-Fried was hailed in the mainstream press as the next Warren Buffett; he shared conference stages with world leaders and celebrities; and he won entree to the inner sanctums of power in Washington.
It all came crashing down in a matter of days last month, when a tweet from an investor turned rival sparked panic among FTX customers, who demanded billions of dollars worth of their deposits back. FTX didn’t have the money. Bankman-Fried’s efforts to find a last-minute, multibillion-dollar bailout came up short, and the firm declared bankruptcy.
An unusually swift investigation by federal authorities revealed what they called a “massive, years-long fraud,” dating back to FTX’s launch in 2019, with Bankman-Fried siphoning FTX customer funds to his hedge fund, Alameda Research.
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End of carouselWhat charges is Sam Bankman-Fried facing?
- Federal prosecutors in the Southern District of New York unsealed an eight-count indictment against Bankman-Fried, alleging fraud and conspiracy.
- The Commodity Futures Trading Commission filed fraud charges against him, seeking restitution for investors and customers in civil court.
- The Securities and Exchange Commission lobbed its own civil charges at Bankman-Fried for allegedly “orchestrating a scheme to defraud equity investors.”
‘Plain old embezzlement’
- Sam Bankman-Fried dropped his objection to extradition from the Bahamas and is expected to face charges in a federal court in Manhattan.
- FTX customers will not fully recover their money, the company’s new CEO, John J. Ray III, told the House Financial Services Committee.
- Ray sees the alleged crimes of the crypto company’s collapse as simple, despite the seemingly complex nature of the circumstances. “This isn’t sophisticated whatsoever. This is just plain old embezzlement,” he said.
What does this mean for the crypto industry?
- Bankman-Fried gave about $40 million in political donations this cycle. See who benefited.
- The collapse has focused new scrutiny on the lack of oversight and regulation in an industry that has operated outside conventional banking rules.
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Last Monday, the night before he was set to testify remotely before the House Financial Services Committee, Bankman-Fried was arrested by Bahamas police at his luxury Nassau condo. For the past nine nights, he has been held at Fox Hill, the island nation’s only prison, known for its poor conditions.
Paulina Villegas contributed to this report.