Bankman-Fried in US custody, two associates plead guilty to FTX fraud

FTX founder Sam Bankman-Fried (C) in handcuffs and escorted by law enforcement in a Nassau court in the Bahamas
FTX founder Sam Bankman-Fried (C) in handcuffs and escorted by law enforcement in a Nassau court in the Bahamas
AFP

US law enforcement on Wednesday took Sam Bankman-Fried into custody and transported him from the Bahamas to New York, where prosecutors said two associates of the FTX founder had now pleaded guilty to charges related to the company’s collapse .

Bankman-Fried is wanted in the United States after the collapse of his cryptocurrency group FTX — based in the Bahamas — and on Wednesday waived his right to contest an extradition request, the island nation’s attorney general said.

U.S. Attorney Damian Williams announced Wednesday night that the FBI had taken the 30-year-old into custody and that he would be “transferred directly to the Southern District of New York.”

Prosecutors had charged him with conspiracy, fraud, money laundering and election finance violations.

Williams also said two key figures in the case had pleaded guilty to charges related to the FTX collapse and were cooperating with investigators.

The charges come just weeks after three-year-old FTX and sister firm Alameda Research collapsed into bankruptcy, dismantling a virtual trading business that had been valued by the market at $32 billion.

Prosecutors allege that Bankman-Fried defrauded investors in FTX and misappropriated funds belonging to clients of FTX and Alameda Research.

“He orchestrated a massive multi-year fraud, diverting billions of dollars of trading platform customers’ funds for his own personal gain and to help grow his cryptocurrency empire,” US prosecutors said.

Five of the eight charges against him carry a maximum sentence of 20 years in prison each.

Separately the SEC charged him with violating securities laws.

Williams, the federal prosecutor, said the two partners who pleaded guilty were Alameda Research CEO Caroline Ellison and FTX co-founder Gary Wang.

Their charges were “in relation to their role in the frauds that contributed to the collapse of FTX,” he said, but did not elaborate.

Williams’ office did not respond to an AFP request for comment on the allegations.

Separately, the SEC and the Commodity Futures Trading Commission (CFTC) announced on Wednesday that they had filed civil suits against Ellison and Wang and were cooperating, which should lead to a more lenient judgment in both cases.

The CFTC estimates that $8 billion in funds were embezzled from FTX customer accounts.

Bankman-Fried, a permanent resident of the Bahamas, has spent the past nine days in Nassau’s Fox Hill prison weighing his options before telling Nassau Magistrates’ Court on Wednesday that he will not fight extradition.

According to US media, his lawyers were trying to negotiate with US judicial authorities for his release on bail.

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