Disgraced 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 US, where he faces fraud charges, a person familiar with the matter said.
The cryptocurrency mogul, 30, was indicted in federal court in Manhattan last Tuesday and accused of defrauding 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.
His decision to consent to extradition would pave the way for him to appear in court in the US to face wire fraud, money laundering and campaign finance charges.
When he arrives in the US, Mr Bankman-Fried is likely be held at the Metropolitan Detention Centre in Brooklyn, though some federal defendants are being held at jails just outside New York City due to overcrowding at the facility, said defence lawyer Zachary Margulis-Ohnuma.
At his initial hearing in Manhattan, Mr Bankman-Fried would be asked to enter a plea and a judge would make a determination on bail, Mr Margulis-Ohnuma said.
Such a hearing must take place within 48 hours of Mr Bankman-Fried's arrival in the US, although it is likely to be sooner, he added.
Prosecutors will likely argue that Mr 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 defence lawyer Michael Weinstein.
“I expect that if a judge grants pre-trial release, they would impose very restrictive and onerous conditions.”
Any trial is likely more than a year away, legal experts said.
A spokesman for Mr Bankman-Fried declined to comment.
Mr Bankman-Fried has acknowledged risk management failings at FTX but has said he does not believe he has criminal liability.
A spokesman for the US Attorney's Office in Manhattan declined to comment.
It was not immediately clear what prompted Mr 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.
In a 2021 report, the US State Department 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.
Mr Bankman-Fried amassed a fortune valued at more than $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 continuing and urged people with knowledge of wrongdoing at FTX or Alameda to co-operate.
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 that Mr Bankman-Fried stepped down as chief executive.
A lawyer for Mr Salame did not immediately respond to a request for comment.
What is blockchain?
Blockchain is a form of distributed ledger technology, a digital system in which data is recorded across multiple places at the same time. Unlike traditional databases, DLTs have no central administrator or centralised data storage. They are transparent because the data is visible and, because they are automatically replicated and impossible to be tampered with, they are secure.
The main difference between blockchain and other forms of DLT is the way data is stored as ‘blocks’ – new transactions are added to the existing ‘chain’ of past transactions, hence the name ‘blockchain’. It is impossible to delete or modify information on the chain due to the replication of blocks across various locations.
Blockchain is mostly associated with cryptocurrency Bitcoin. Due to the inability to tamper with transactions, advocates say this makes the currency more secure and safer than traditional systems. It is maintained by a network of people referred to as ‘miners’, who receive rewards for solving complex mathematical equations that enable transactions to go through.
However, one of the major problems that has come to light has been the presence of illicit material buried in the Bitcoin blockchain, linking it to the dark web.
Other blockchain platforms can offer things like smart contracts, which are automatically implemented when specific conditions from all interested parties are reached, cutting the time involved and the risk of mistakes. Another use could be storing medical records, as patients can be confident their information cannot be changed. The technology can also be used in supply chains, voting and has the potential to used for storing property records.
Tomorrow 2021
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- Emerging technologies and VFX with AI and CGI.
- Understanding of marketing objectives and audience engagement.
- Tourism industry knowledge.
- Professional ethics.
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Send “thenational” to the following numbers or call the hotline on: 0502955999
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Favourite book: Kane and Abel by Jeffrey Archer
Favourite quote: “The world makes way for the man who knows where he is going.” - Ralph Waldo Emerson, American essayist
Favourite Authors: Arab poet Abu At-Tayyib Al-Mutanabbi
Favourite Emirati food: Luqaimat, a deep-fried dough soaked in date syrup
Hobbies: Reading and drawing
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