At his press conference on charges against Bahamas-based FTX founder Sam Bankman-Fried, Manhattan US Attorney Damian Williams said the case shows “you can commit fraud in shorts and t-shirts in the sun.”
But Williams didn’t address how US authorities plan to get Bankman-Fried back from his tropical locale to face the eight-count indictment unsealed against him Tuesday in New York federal court.
In his first appearance since his arrest Monday evening, Bankman-Fried told a Bahamian judge at an arraignment Tuesday that he wouldn’t waive his right to an extradition hearing. A defense lawyer said Bankman-Fried planned to fight being sent to the US.
The charges against him include wire fraud, conspiracy to commit securities fraud and several other counts for allegedly misappropriating billions of dollars in FTX customers funds for personal use and risky bets by sister trading house Alameda Research. Williams on Tuesday called the case “one of the biggest financial frauds in American history” and said the investigation of the alleged scheme is “very much ongoing.”
Bankman-Fried has denied knowingly committing fraud in numerous media interviews. Mark Cohen, a New York lawyer for the FTX founder, said in a statement on Tuesday that his client is “reviewing the charges with his legal team and considering all of his legal options.”
Though his office has said it will seek Bankman-Fried’s extradition, Williams declined to comment on those efforts on Tuesday.
If Bankman-Fried does fight extradition, there may be potential for him to drag things out. Many high-profile extradition battles have gone on for years. WikiLeaks founder Julian Assange was charged by US authorities in 2019 for publishing leaked government secrets but is still fighting extradition from the UK, largely on mental-health grounds.
Huawei Technologies Co. Ltd. Chief Financial Officer Meng Wanzhou was arrested in Canada in 2018 at the request of the US government which accused her of conspiring to avoid US sanctions on Iran. She fought extradition to the US until September 2021, when she was released under a non-prosecution deal with the Justice Department.
Meng’s case had political and diplomatic dimensions Bankman-Fried’s lacks. The Chinese government vociferously objected to her arrest and took two Canadians living in China into custody in response — they were released shortly after she was. But her legal arguments also prolonged the case. She focused on the US-Canada extradition treaty’s requirement that the charged offense be a crime in both jurisdictions, arguing that violating US sanctions wasn’t illegal in Canada.
The US-Bahamas extradition treaty has a similar “double criminality” requirement, and lawyers can parse statutes extremely closely to distinguish between two nations’ definitions of a crime.
Czech-born businessman Viktor Kozeny successfully fought extradition from the Bahamas on US charges that he orchestrated a scheme to bribe Azerbaijani officials in return for rights to buy the country’s state oil company. A local court found that Kozeny’s alleged bribes occurred before the Bahamas joined the Inter American Convention Against Corruption and therefore weren’t crimes in the country at the time.
“Extradition law can be rather arcane,” said Douglas McNabb, a Houston lawyer who specializes in extradition cases. He said the Bahamas sees a number of such cases, though mainly involving drug-trafficking defendants.
Eight men facing US drug charges managed to put off extradition from the Bahamas for 11 years before they were finally sent to Florida in 2015. Among the arguments they employed against extradition was that one of the judge who heard the case had been subject to a mandatory retirement age.
Bruce Zagaris, a Washington lawyer, said one reason extraditions from the Bahamas can drag on is that the British Commonwealth country sends final appeals to the Privy Council in London. Defendants with money don’t hesitate to take the case all the way.
“That could take five, six, seven years between all the levels,” Zagaris said.
On the other hand, Bankman-Fried could ultimately decide to return to the US, said Michael Zweiback, a Los Angeles-based criminal defense lawyer with extradition experience. He said many Americans choose to return rather than sit in a foreign jail.
Though Bankman-Fried was living in a luxury penthouse in the Bahamas, he might not enjoy those accommodations while fighting extradition, Zweiback said.
Bankman-Fried’s request to be released on $250 000 cash bail was rejected on Tuesday by a Bahamian judge who deemed him a flight risk. An extradition hearing was set for February 8.
“He can waive extradition and of course he will be placed in handcuffs and put on board a plane with an escort from the US Marshals Service and brought to La Guardia or JFK Airport and brought straight to the SDNY courthouse.” Zweiback said, referring to the Manhattan federal court.
“He can sign extradition paperwork tomorrow and be there within a week.”
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