Sam Bankman-Fried set to accept extradition to the US

Former chief executive of crypto trading platform FTX is expected to appear in court in the Bahamas on Monday

Disgraced FTX founder Sam Bankman-Fried is led away by officers of the Royal Bahamas Police Force after his arrest in Nassau last week. AFP

Disgraced former FTX chief executive Sam Bankman-Fried is expected to appear in court in the Bahamas on Monday to reverse his decision to contest extradition to the US, where he faces fraud charges, a person familiar with the matter said.

The cryptocurrency mogul, 30, was indicted in federal court in Manhattan last Tuesday and accused of defrauding FTX customers by using billions of dollars in stolen deposits to pay for expenses and debts and to make investments for his crypto hedge fund, Alameda Research.

His decision to consent to extradition would pave the way for him to appear in court in the US to face wire fraud, money laundering and campaign finance charges.

When he arrives in the US, Mr Bankman-Fried is likely be held at the Metropolitan Detention Centre in Brooklyn, though some federal defendants are being held at jails just outside New York City due to overcrowding at the facility, said defence lawyer Zachary Margulis-Ohnuma.

At his initial hearing in Manhattan, Mr Bankman-Fried would be asked to enter a plea and a judge would make a determination on bail, Mr Margulis-Ohnuma said.

Such a hearing must take place within 48 hours of Mr Bankman-Fried's arrival in the US, although it is likely to be sooner, he added.

Prosecutors will likely argue that Mr Bankman-Fried is a flight risk and should remain in custody because of the large sums of money involved in the case and the unclear location of those funds.

“The missing money gives prosecutors strong arguments that he is a flight risk,” said former federal prosecutor and white-collar defence lawyer Michael Weinstein.

“I expect that if a judge grants pre-trial release, they would impose very restrictive and onerous conditions.”

Any trial is likely more than a year away, legal experts said.

A spokesman for Mr Bankman-Fried declined to comment.

Mr Bankman-Fried has acknowledged risk management failings at FTX but has said he does not believe he has criminal liability.

A spokesman for the US Attorney's Office in Manhattan declined to comment.

It was not immediately clear what prompted Mr Bankman-Fried to change his mind and decide not to contest extradition.

He was remanded on Tuesday to the Bahamas' Fox Hill prison after chief magistrate JoyAnn Ferguson-Pratt rejected his request to remain at home while awaiting a hearing on his extradition.

In a 2021 report, the US State Department said conditions at Fox Hill were “harsh”, citing overcrowding, rodent infestation and prisoners relying on buckets as toilets. Authorities there say conditions have since improved.

Fox Hill prison in the Bahamas, where FTX co-founder Sam Bankman-Fried is in custody. Reuters

Mr Bankman-Fried amassed a fortune valued at more than $20 billion as he rode a cryptocurrency boom to build FTX into one of the world's largest exchanges.

His arrest last Monday in the Bahamas, where he lives and where FTX is based, came just a month after the exchange collapsed amid a flurry of customer withdrawals.

Damian Williams, the top federal prosecutor in Manhattan, described the collapse of FTX as one of the “biggest financial frauds in American history”.

He has described the office's investigation as continuing and urged people with knowledge of wrongdoing at FTX or Alameda to co-operate.

One top executive at FTX, Ryan Salame, told securities regulators in the Bahamas on November 9 that assets belonging to the exchange's customers were transferred to Alameda to cover the hedge fund's losses, according to a document made public as part of FTX's bankruptcy proceedings in Delaware.

FTX filed for bankruptcy on November 11, the same day that Mr Bankman-Fried stepped down as chief executive.

A lawyer for Mr Salame did not immediately respond to a request for comment.