FTX’s Bankman-Fried to Go to Court in Bahamas; He is expected to waive extradition

Bankman-Fried initially said she was resisting extradition following her arrest a week ago in the Bahamas, where she lives and where FTX is located. He was denied bail and sent to Fox Hill Prison in the Caribbean country.

Reuters first reported on Saturday that Bankman-Fried will return to court to reconsider the decision.

The 30-year-old crypto tycoon became a multi-billionaire and influential political donor in the US as the value of bitcoin and other digital assets soared, until FTX collapsed after a wave of withdrawals in early November. The exchange was declared bankrupt on November 11.

Federal prosecutors in Manhattan said Bankman-Fried stole billions of dollars in FTX client deposits to cover losses at his crypto hedge fund, Alameda Research. They accuse Bankman-Fried of misleading lenders and investors, conspiring to launder money and violating US campaign finance laws.

Bankman-Fried admitted to risk management errors at FTX, but said he does not believe he is criminally responsible.

After being extradited to the U.S., Bankman-Fried is due to appear before a judge in Manhattan within two days, though the trial will be held soon after. He will be asked to file a plea and the judge will decide on bail.

Prosecutors are expected to argue that Bankman-Fried is a flight risk and should be detained because of the large amount of money involved and the location of those assets being unclear.

Bankman-Fried could be held at the Metropolitan Detention Center in Brooklyn, although some federal suspects are held in jails outside New York City because of overcrowding, said New York defense attorney Zachary Margulis-Ohnuma of ZMO Law PLLC. Not in the relevant case.

It was not immediately clear what prompted Bankmann-Fried to change his mind about deportation. In a 2021 report, the US State Department described “horrendous” conditions at Fox Hill Prison, where Bankman-Fried was held, with overcrowding, rodents and inmates using buckets as toilets. Bahamas officials later say conditions have improved.

Bankman-Fried was remanded in custody on Tuesday after Chief Magistrate JoyAnn Ferguson-Broad rejected his request to remain at home pending an extradition hearing.

In the United States, it is very unusual for judges to deny bail to defendants accused of nonviolent financial crimes, although they typically demand large dollar amounts and impose strict probation conditions.

High-profile defendants such as Ponzi schemer Bernard Madoff, Theranos founder Elizabeth Holmes, and Enron executives Jeffrey Skilling and Kenneth Lay were all released on bail before the trial began.

Damian Williams, the top federal prosecutor in Manhattan, last week described FTX’s demise as one of the “biggest financial frauds in American history.” He said the agency’s investigation is ongoing and anyone with knowledge of wrongdoing at FTX or Alameda is urged to cooperate.

A potential trial against Bankman-Fried could take more than a year, legal experts told Reuters.