FTX founder Sam Bankman-Fried flies to New York after court chaos

FTX co-founder Sam Bankman-Fried is escorted by corrections officers at the Magistrate’s Court on December 21, 2022 in Nassau, Bahamas.

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Sam Bankman-Fried is flying Wednesday night to New York, according to the Bahamas Attorney General’s office, where he is later expected to be arraigned in US federal court, ending a daylong story.

Bankman-Fried, 30, was indicted in New York federal court on Dec. 9 and arrested three days later by Bahamian law enforcement at the request of U.S. prosecutors.

His attorney, Jerone Roberts, reading an affidavit signed on Dec. 20, told the court that Bankman-Fried was consenting to the extradition in part because of a “desire to make the relevant clients whole.” Bankman-Fried “was anxious to get out,” Roberts told the court.

It’s unclear how his return would help plug the $8 billion hole in the balance sheet that federal complaints allege resulted from risky trading and overspending by FTX executives.

Bankman-Fried will face court action and bail after landing. Unlike other cases, however, Bankman-Fried faces a specific set of challenges.

“This is obviously not the typical case,” former federal prosecutor Renato Mariotti told CNBC. “He’s facing decades in prison. And he doesn’t have ties to the community in SDNY like a typical defendant would, and he also has ties to a foreign jurisdiction. So prosecutors have an opportunity to convince the judge to order detention unless the defendant releases assets or a substantial monetary bond’.

Throughout the extradition waiver process, Bankman-Fried’s Bahamian legal team and U.S. attorneys appear to be at loggerheads. His legal team initially said it would fight extradition attempts, but on Saturday a person familiar with the matter told CNBC that the crypto billionaire had changed his mind and would return to the United States.

On Monday morning, counsel for Bankman-Fried in the Bahamas said the former billionaire would not return to the United States without seeing a copy of his indictment, with the lawyer telling a Bahamian judge he was “shocked” even as saw Bankman-Fried in court. .

Chaos ensued as reporters and lawyers for Bankman-Fried tried to ascertain whether the former cryptocurrency billionaire would return to the United States for arraignment in federal court.

Finally, on Tuesday, a Bahamas prison official and a source familiar with the matter confirmed that Bankman-Fried had signed extradition papers and will appear for his final hearing in Nassau on Thursday.

When Bankman-Fried lands in New York, the hitherto informal proceedings must take on a more familiar character. In a typical federal case, the defendant “would be taken to the detention center for processing prior to the initial hearing/custody assignment,” former CFTC attorney and Kennyhertz Perry partner Braden Perry told CNBC.

“But again, if it’s agreed in advance with the judge in charge of the detention hearing, the court might allow a pretrial hearing, but that’s unlikely. His lawyers could also waive the detention hearing , at least for now, and ask for a further detailed evidentiary hearing to ensure their best case is made with the proper evidence for detention, as it is usually a one-shot to get out before trial,” continued About.

Bankman-Fried is accused by federal law enforcement and financial regulators of perpetrating what the SEC has called one of the largest and most “brazen” frauds in recent memory. Replacement CEO John J. Ray described a “complete failure of corporate control” at the company.

Federal regulators alleged that Bankman-Fried used $8 billion in client assets for extravagant real estate purchases and vanity projects, including stadium naming rights and millions in political donations.

CNBC’s Kate Rooney contributed to this report.

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