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 United States, where he faces fraud charges, a person familiar with the matter said on Saturday.
The 30-year-old cryptocurrency mogul was indicted in federal
court in Manhattan on Tuesday and accused of engaging in a scheme to defraud
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 LLC.
His decision to consent to extradition would pave the way
for him to appear in U.S. court to face wire fraud, money laundering and
campaign finance charges.
Upon arrival in the United States, Bankman-Fried would
likely be held at the Metropolitan Detention Center in Brooklyn, though some
federal defendants are being held at jails just outside New York City due to
overcrowding at the facility, said defense lawyer Zachary Margulis-Ohnuma.
At his initial court hearing in Manhattan, Bankman-Fried
would be asked to enter a plea and a judge would make a determination on bail,
Margulis-Ohnuma said. The attorney added that such a hearing must take place
within 48 hours of Bankman-Fried's arrival in the United States, though it
would likely be sooner.
Prosecutors will likely argue that 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
defense attorney Michael Weinstein. "I expect that if a judge grants
pretrial release, they would impose very restrictive and onerous
conditions."
Any trial is likely more than a year away, legal experts
told Reuters.
A spokesman for Bankman-Fried declined to comment. Bankman-Fried
has acknowledged risk management failings at FTX but has said he does not
believe he has criminal liability.
A spokesman for the U.S. Attorney's Office in Manhattan
declined to comment.
'Biggest financial frauds in American history'
It was not immediately clear what prompted 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.
The U.S. State Department in a 2021 report 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.
Bankman-Fried amassed a fortune valued at over $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 ongoing,
and urged people with knowledge of wrongdoing at FTX or Alameda to cooperate.
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
Bankman-Fried stepped down as CEO.
A lawyer for Salame did not immediately respond to a request
for comment.