Sam Bankman-Fried, the founder of FTX, the company behind the recent cryptocurrency debacle, was extradited on Wednesday to the US, where he faces criminal charges that could see him spend the rest of his life behind bars.
Bahamian authorities confirmed that the young businessman had waived his right to contest the extradition, so they would proceed with his shipment on Wednesday night to New York, where he is expected to appear before a judge on Thursday.
“The Office of the Attorney General of The Bahamas announces the extradition to the United States of Sam Bankman-Fried (“SBF”), former CEO of FTX. SBF will be departing The Bahamas for the United States tonight,” it said in a statement.
What is Bankman-Fried charged with?
Bahamian authorities arrested Bankman-Fried last Monday at the request of the U.S. government. U.S. prosecutors allege he played a central role in FTX’s rapid collapse and concealed its financial problems from the company from the public and investors.
New York prosecutors investigating the case charged the young man with eight felonies ranging from wire fraud to money laundering. They also charged him with crimes against campaign finance laws.
The Securities and Exchange Commission (SEC) noted that Bankman-Fried illegally used investor money to purchase real estate on behalf of himself and his family.
In the civil complaint filed by the SEC, Bankman-Fried is accused of diverting FTX customer funds to Alameda Research, a cryptocurrency markets trading fund he owned, to make risky undisclosed investments, lavish real estate purchases and donations to politicians.
In addition, Alameda failed to segregate FTX clients’ money from their investments, using it all “indiscriminately for its trading operations. ” None of this was disclosed to FTX’s equity investors or the platform’s trading clients.”
“Bankman-Fried built a house of cards on a foundation of deceit while telling investors that his was one of the safest buildings in the crypto world,” said SEC Chairman Gary Gensler. “The alleged fraud committed by Bankman-Fried is a wake-up call to cryptocurrency platforms that they must comply with our laws,” he added.
FTX filed for bankruptcy on Nov. 11 when it ran out of money after the cryptocurrency equivalent of a bank run.
Before the bankruptcy, Bankman-Fried was seen by many in Washington and Wall Street as a wunderkind of digital currencies, someone who could help popularize them, in part by working with lawmakers to provide more oversight and confidence to the industry.
Bankman-Fried was worth tens of billions of dollars, at least on paper, and was able to attract celebrities like Tom Brady or ex-politicians like Tony Blair and Bill Clinton to its conferences at luxury resorts in the Bahamas. A prominent Silicon Valley firm, Sequoia Capital, invested hundreds of millions of dollars in FTX.
FTX’s new CEO, John Ray III, told a congressional committee Tuesday that there was no sophisticated strategy at all in what Bankman-Fried did.
“This is just old-fashioned embezzlement, taking money from others and using it for your own purposes,” he said.