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The wheels of the US justice system finally started rolling in earnest last week when FTX's disgraced former CEO, Sam Bankman-Fried (SBF), was arrested by the Bahamian authorities on account of a sealed indictment shared by the United States Attorney for the Southern District of New York. While initially it was believed that SBF would contest his extradition to the US, a few nights in Bahamian jail were apparently sufficient to remove any lingering delusions, with the former CEO of FTX now apparently in a rush to return to the US.
BANKMAN-FRIED TELLS BAHAMAS JUDGE HE WISHES TO WAIVE HIS RIGHT TO FORMAL EXTRADITION PROCEEDINGS -COURT HEARING
— First Squawk (@FirstSquawk) December 21, 2022
To wit, as per the latest reports that are trickling in, Sam Bankman-Fried has waived his right to formal "extradition proceedings," with his lawyers going so far as to inform the presiding judge that SBF is "anxious to leave." For now, the proceedings have been adjourned. Bear in mind that SBF's extradition hearing was originally scheduled for February 2023.
Of course, Sam Bankman-Fried's newfound love for the US only emerged once he was able to witness first-hand the condition of Bahamian prisons. Fox Hill, as the only prison complex in the Bahamas is known, is notorious for its "harsh" conditions, as per a 2021 report by the US State Department. Fox Hill prison inmates suffer from overcrowding, rodent infestation, and the ignominy of having to use a bucket in lieu of proper toilet facilities. While the Bahamas has managed to improve some of the more glaring lacunae in maintaining sanitary conditions at the facility by constructing new buildings, the overall conditions still remain a mixed bag of sorts.
Sam Bankman-Fried’s extradition to the U.S. has been approved, and he will be transferred to U.S. custody to face criminal charges, per WSJ.
— unusual_whales (@unusual_whales) December 21, 2022
Of course, now that it appears certain that Sam Bankman-Fried is returning to the US, he will have to face a veritable host of legal challenges. In addition to the indictment by the US Attorney for the Southern District of NY, which includes charges related to wire fraud, securities fraud, and money laundering, the former CEO of FTX will also face charges from the US SEC for violating securities law.
For the uninitiated, the crypto exchange FTX maintained an undisclosed synergetic relationship with Sam Bankman-Fried's crypto trading arm, Alameda Research, replete with commingled funds at the Silvergate bank, which allowed Alameda the convenience of borrowing FTX client funds after posting collateral in the form of illiquid tokens, including FTX's in-house FTT coin.
This gig, however, ended when Alameda's outsized exposure to the FTT token became public knowledge in early November, prompting Binance to dump its own FTT holdings, collapsing the token's price. Amid this fracas, the then-CEO of Alameda Research, Caroline Ellison, gave away the trading firm's floor price on the FTT token, inviting a veritable onslaught of speculative attacks. With Alameda's ability to pay off its liabilities impaired as its collateral of illiquid tokens quickly lost their inflated values, and with surging client withdrawals resulting in a bank run, FTX had no choice, in the end, to declare bankruptcy.
