The last 48 hours have been dramatic for Sam Bankman-Fried, the founder of the bankrupt cryptocurrency exchange FTX.
The former king of crypto was arrested on December 12 in the Bahamas, where he lives, at the request of the American authorities who are trying to piece together the overnight implosion of his multi-billion dollars crypto empire which occurred on November 11.
In addition to FTX, Bankman-Fried, or SBF as he is nicknamed in the crypto industry, had also founded Alameda Research, a hedge fund which also serves as a trading platform.
SBF who lived in a luxurious penthouse thus spent the night of December 12 at the local police station.
The next day, events took an even more dramatic turn. U.S. regulators -- the Department of Justice, the U.S. Securities and Exchange Commission or SEC and the Commodity Futures Trading Commission or CFTC -- have filed a series of criminal and civil charges against the former trader.
'Massive Yearslong Fraud'
Justice Department prosecutors filed eight criminal counts against Bankman-Fried, according to the indictment unsealed on Dec. 13. Four of the charges, including conspiracy to commit wire fraud on customers and lenders and wire fraud, indicate that the alleged acts began at least in 2019. That was the year FTX was created.
According to the federal prosecutors, Bankman-Fried SBF lied or made misleading statements.
"From at least in or about 2019, up to and including in or about November 2022," Bankman-Fried "and others known and unknown, willfully and knowingly did combine, conspire, confederate, and agree together and with each other to commit wire fraud," prosecutors within the U.S. Department of Justice's Southern District of New York alleged.
In their 13-page document, which is sparse on details, the prosecutors say Bankman-Fried and other "knowingly" devised and intended to devise "a scheme and artifice to defraud, and for obtaining money and property by means of false and fraudulent pretenses, representations and promises. ...."
The collective prison time he faces from conviction on all charges is 115 years.
"Bankman-Fried was orchestrating a massive, yearslong fraud, diverting billions of dollars of the trading platform’s customer funds for his own personal benefit and to help grow his crypto empire,” the S.E.C. alleges in its civil complaint.
He used customer funds to "make undisclosed venture investments, lavish real estate purchases, and large political donations,” the complaint said.
Mark Cohen, an attorney for Bankman-Fried, said his client "is reviewing the charges with his legal team and considering all of his legal options.”
Bail Denied
But the day was not over for Bankman-Fried. He appeared at the Magistrate Court in the Bahamas for his arraignment hearing. He was wearing a blue suit and a white shirt. He was escorted by the police.
His parents, Joe Bankman and Barbara Fried, who are both professors of law at Stanford University, were in the room.
Bahamian prosecutor Franklyn Williams argued that Bankman-Fried should not be released because he is a "flight risk," as he has enough financial means to quietly leave the country.
But Bankman-Fried's attorney disputed that claim. The lawyer explained that the fact that Bankman-Fried remained in the Bahamas after the collapse of FTX when there were no charges against him was proof that he had no intention of fleeing.
He also said his client was asking for medication for depression and attention deficit disorder. Bankman-Fried was asking to be released against a cash bail of $250,000.
But the court's chief magistrate, Joyann Ferguson-Pratt, decided that Bankman-Fried would remain in custody.
Damian Williams, the U.S. attorney for the Southern District of New York, said at a press conference in New York, that the FTX collapse was "one of the biggest financial frauds in American history."
American regulators want to move very quickly. But to achieve this it will be necessary to obtain the extradition of Bankman-Fried so that he can be judged on American soil.
There is an existing extradition treaty between the United States and the Bahamas but the procedure could take several months because Bankman-Fried told the judge that he would not waive his right to an extradition hearing.
One of his attorneys said Bankman-Fried was considering fighting his extradition to the United States. If the former star of the crypto sphere challenges his extradition, the procedure could take at least several months.
He wouldn't be the first to do so. WikiLeaks founder Julian Assange was charged in 2019 for publishing leaked government secrets. A refugee in the United Kingdom, he is still opposing his extradition.
An extradition hearing has been set for February 8.
