fraudcharges

Disgraced FTX Founder Sam Bankman-Fried who moved his multi-million dollar crypto empire to the Bahamas in 2021, is on a third night at Metropolitan Detention Center in Brooklyn after he violated his bail order.

The 31-year-old who adopted the Bahamas as his home, courting government officials before his empire imploded and was extradited to face fraud charges in the United States, tampered with witnesses ahead of his October trial according to Judge Lewis Kaplan of the U.S. District Court for the Southern District of New York.

“My conclusion is there is probable cause to believe the defendant has attempted to tamper with witnesses on at least two… there is a rebuttable presumption that there is no set of conditions that will ensure Bankman-Fried will not be a danger.

“He has gone up to the line over and over again, and I am going to revoke bail,” Judge Kaplan said on Friday.

Since his extradition, Bankman-Fried was on bail and confined to his parent’s $4 million Palo Alto home.

What happened?

Prosecutors said, Bankman-Fried reached out to former FTX.US General Counsel Ryne Miller and used a virtual private network to watch the Super Bowl. Also, he shared part of his associate’s Alameda Research CEO Caroline Ellison’s private diary with the New York Times in an attempt to intimate her since she is a major witness for the prosecution in the case.

While on bail, prosecutors said he’s had conversations with author Michael Lewis, who is writing a book about FTX that is set for publication the week the trial begins.

After the judge’s order, Bankman-Fried was instructed to remove his navy suit jacket as two US marshalls prepared to handcuff him. His mother, Barbara Fried, attempted to approach him but was warned to stand back by a court officer and was expected to be taken to the Metropolitan Detention Center in Brooklyn.

The big story

After moving his exchange from Hong Kong to the Bahamas, Bankman-Fried flooded the Bahamas with money and donations. A little more than one year later, the millions of dollars disappeared from his exchange and it collapsed. He filed for bankruptcy.

Bankman-Fried’s trial is set for October as he faces charges of wire fraud, commodities fraud, securities fraud, money laundering and related conspiracy charges.

The industry titan courted by politicians and celebrities is now a criminal defendant facing years in prison.

Bankman-Fried’s lawyer said in court, he was protecting his reputation and intended to appeal.

The Sam Bankman-Fried saga is getting worse and he is now facing a slew of charges in the US after his arrest and a request for extradition was filed in the Bahamas. His criminal charges range from fraud to money laundering while the Bahamas conducts its own investigations after the implosion of FTX, the world’s second-largest crypto exchange.

But before he is extradited, Bankman-Fried must appear before a Bahamas court for proceedings and waive his rights to be extradited.

What is extradition and what is the agreement between the Bahamas and the US?

Extradition is when one country hands over a suspect to face trial for alleged crimes.

It is a process and the circumstances were established by a treaty signed in 1990.

Whenever the US wants to put a suspect before its court, its prosecutors ask the Bahamas government.

The suspect is sent to a Bahamas court where the judge examines the request made and is convinced that the suspect is indeed wanted by the USA.

What is Sam Bankman-Fried Accused of?

Eight charges were levied against the 30-year-old crypto genius: Conspiracy to commit wire fraud on customers, wire fraud on customers, conspiracy to commit wire fraud on lenders, wire fraud on lenders, conspiracy to commit commodities fraud, conspiracy to commit securities fraud, conspiracy to commit money laundering, conspiracy to defraud the United States and violation of campaign finance laws.

Before the charges were filed, Bankman-Fried denied he defrauded investors in media interviews and chalked up losses to accounting errors.

But today, a South District New York Court stated that he defrauded investors in “good old fashion embezzlement,” and described it as “a house of cards” that crumbled. Customers lost $8 billion said Gretchen Lowe of the Commodity Futures Trading Commission.

Bankman-Fried plans to put up a fight to avoid extradition by not waiving his rights.

If Bankman-Fried had waived his rights or agreed to the extradition, the Bahamas would have been able to immediately extradite him.

His rejection on Tuesday may delay the extradition but his attempts, most likely, won’t be successful.

It’s unknown now how quickly the extradition would happen.

His next extradition hearing is scheduled for February 8, 2023.

Former FTX CEO Sam Bankman Fried, now facing a litany of criminal charges in the US, was expected to testify before US Congress on Tuesday, fielding questions from the House Financial Services Committee on the billions of dollars missing from his cryptocurrency platform. Instead, he stood in a Bahamas court under arrest and fighting extradition, as new CEO John Ray III showed up on Capitol Hill alone, revealing the spectacular underpinnings of FTX, the now troubled exchange.

The public anticipated Bankman-Fried’s appearance, whether in-person or virtually, since Chairwoman Maxine Waters posted the request to Twitter, appealing for the former billionaire to account for the missing massive cash which belonged to his customers and investors.

The arrest of Bankman-Fried was rapid and shocking. The dramatic turn of events now meant US lawmakers will no longer grill him on Capitol Hill.

Congressman William Timmons (Republican-South Carolina), also a former prosecutor, questioned the “bizarre” move by the prosecutors of the South District of New York.

“Why 36 hours before testifying…did the South District New York send an arrest warrant to facilitate the arrest to preclude his [Sam Bankman-Field] testimony?” he asked.

Ray agreed that Bankman-Fried’s testimony to Congress would have “absolutely” been helpful to understanding the case.

Bankman-Fried was arrested on Monday night in the Bahamas, by request from the US government, one day before the congressional hearing. US Prosecutor Damian Williams threw eight charges of conspiracy, fraud, money laundering, and campaign violation at the 30-year-old crypto darling.

“I believe it was a decision made by the DOJ to prevent Sam Bankman-Fried from coming here to answer questions in front of people,” Timmons asserted.

His testimony “would be great for the case,” he continued. “I just don’t understand it.”

“I look forward to figuring out why they did that.”

Bankman-Fried was the second biggest donor to the Democratic party, even giving millions to President Joe Biden when he campaigned against Donald Trump. It is reported that he hoped to influence crypto regulations.

FTX, once valued at $32 billion imploded in a matter of weeks after documents were leaked that Bankman-Fried was funneling cash to his sister company Alameda Research, and the exchange had a gap of $8 billion in losses.

Bankman-Fried quickly filed for bankruptcy on November 11 and the man who was once lauded for his billion-dollar crypto successes became the villain of the financial market with only a meager $100,000 reportedly left in his bank account.

Photo credit: Keith Gomez