FTX co-founder Sam Bankman-Fried arrived in the United States from the Bahamas in FBI custody on Wednesday, facing criminal fraud charges after the spectacular collapse of the crypto exchange. FTX and its sister trading house Alameda Research went bankrupt last month, dissolving a virtual trading business that had been valued by the market at US$32 billion. Prosecutors allege Bankman-Fried cheated investors and misused funds that belonged to FTX and Alameda Research customers. US Attorney Damian Williams announced Wednesday the 30-year-old would be “transported directly to the Southern District of New York” on arrival in the United States. The plane carrying Bankman-Fried arrived Wednesday night, US media reported. He is likely to appear before a US federal court in Manhattan on Thursday. FTX’s ‘Korean friend’s account’ belonged to Alameda, masking giant liabilities At his court appearance, known as an arraignment, he is expected to be asked to enter a plea. The US judge would determine whether to grant him bail, and if so, on what conditions. Earlier in the Bahamas – where FTX is headquartered – he had waived his right to challenge the US extradition request, the island nation’s attorney general said. US prosecutors last week charged Bankman-Fried with conspiracy, wire fraud, money laundering and election finance violations. He “was orchestrating a massive, years-long fraud, diverting billions of dollars of the trading platform’s customer funds for his own personal benefit and to help grow his crypto empire,” they said. Five of the eight counts against Bankman-Fried carry a maximum sentence of 20 years in prison each. The SEC separately accused him of violating securities laws. US Attorney Williams said two key figures in the case – Alameda Research CEO Caroline Ellison and FTX co-founder Gary Wang – had pleaded guilty to charges related to the FTX collapse and that they were cooperating with authorities. Their charges were “in connection with their roles in the frauds that contributed to FTX’s collapse,” he said, but did not provide further details. Separately, the SEC and the Commodity Future Trading Commission (CFTC) announced Wednesday they had filed civil suits against Ellison and Wang and that the two were cooperating, which should lead to a more lenient judgment. The CFTC estimates that US$8 billion in funds were misappropriated from FTX customer accounts. Hong Kong investors in FTX still under cover as founder is arrested in Bahamas After its founding in 2019, FTX rose spectacularly to become a leading player in the crypto world. Bankman-Fried appeared on the covers of finance and tech magazines, and drew in huge investments from prominent fund managers and venture capitalists. He was also lionised in the halls of politics, becoming a spokesman for the industry on regulatory issues in Washington, and contributing tens of millions of dollars to the Republicans and the Democrats. But it all imploded dramatically in November when a media report said Alameda’s balance sheet was heavily built on a token created by FTX with no independent value – and exposed Bankman-Fried’s companies as being dangerously interlinked. Bankman-Fried was arrested at his Nassau flat on December 12 at the request of federal prosecutors in New York. He has said that he did not “knowingly” misuse customers’ funds, and said he believes his millions of angry customers will eventually be made whole. At a congressional hearing last week, the new FTX CEO John Ray III, who is tasked with taking the company through bankruptcy, bluntly disputed those assertions: “We will never get all these assets back,” Ray said. A Bahamas permanent resident, Bankman-Fried spent the past nine days in prison, weighing his choices before telling the Nassau magistrate court Wednesday that he would not fight extradition. Bankman-Fried’s defence lawyer, Jerone Roberts, said his client was “anxious to leave”. The judge said he was satisfied that Bankman-Fried had not been “forced, coerced or threatened” into making the extradition decision. Additional reporting by Reuters and Associated Press
