Two key figures in the case, including the sulphurous Caroline Ellison, have already been charged.
The founder and former boss of the FTX cryptocurrency trading platform Sam Bankman-Fried arrived in New York on the evening of December 21, where he is to appear before a judge in the coming hours, according to several American media. “SBF“, His nickname, “will be driven directly to the Southern District of (State of) New York“, jurisdiction that includes Manhattan, after his arrival, “and he will be presented to a judge as soon as possibleManhattan Federal Prosecutor Damian Williams announced earlier in a video posted to Twitter.
Earlier Wednesday, Sam Bankman-Fried agreed to be extradited to the United States during a hearing in Nassau, the capital of the Bahamas. At the hearing, he expressed his “desire to ensure affected customers get their money back“, according to Wall Street Journal. The Manhattan federal prosecutor also revealed on Wednesday that two key figures in the case had been charged. The latter have pleaded guilty and are collaborating with the government, which means that they could incriminate Sam Bankman-Fried.
Read alsoFTX: deceits, conflicts of interest, excess… Will Sam Bankman-Fried end his life in prison?
They are Caroline Ellison, former boss of Alameda Research, and Gary Wang, co-founder of FTX, charged “in connection with their role in the fraud that contributed to the collapse of FTX“said Damian Williams, without giving more details. Asked by AFP as to the charges, the Manhattan federal prosecutor’s office did not respond. According to the Wall Street Journal, both were charged with fraud, while only Caroline Ellison was charged with criminal association.
Imminent audience
Alameda Research is the company that Sam Bankman-Fried used, according to the indictment, to carry out risky transactions with billions of dollars in funds deposited by clients on the FTX platform, without their being aware of it informed. Since the bankruptcy of FTX on November 11, Sam Bankman-Fried has repeatedly argued publicly that he had not been at the helm of Alameda Research for several months, indirectly incriminating Caroline Ellison. An argument disputed by the prosecution, which claims that “SBF” remained the main decision maker within Alameda until the filing for bankruptcy of FTX.
During the first hearing in Manhattan, the New York magistrate in charge of the case will read him the charges against him and ask him whether or not he wishes to plead guilty. She will then decide whether or not Sam Bankman-Fried should be released on bail. If he is kept in detention, pending his trial, he should be sent to the Metropolitan Detention Center (MDC) in Brooklyn, decried for its lack of staff and questionable management of detainees.
Until last year, defendants in pretrial detention who depended on the Manhattan federal court were housed at the Metropolitan Correctional Center (MCC), located on the southern tip of the island. But the site closed in 2021, officially temporarily. He had been the subject of repeated complaints alleging unsanitary conditions of detention. His reputation had also been tarnished by the suicide, in August 2019, in an MCC cell, of Jeffrey Epstein, accused of having created and maintained a pedophile network.
A whole life in prison?
Arrested on December 12 in Nassau, Sam Bankman-Fried was already in detention in the Bahamas. Apart from risky transactions through Alameda, he is also suspected of having invested some of this money in real estate in the Bahamas. He is also accused of having made donations to Democratic politicians – always from funds from FTX clients -, including Joe Biden during his presidential campaign.
Five of the eight charges against him each provide for a maximum sentence of twenty years in prison. The one who has long been seen as an iconoclastic genius of cryptocurrencies is therefore likely to spend the rest of his life in prison. Caroline Ellison and Gary Wang have also been summoned to civil justice by the two main American financial market regulators, the SEC and the CFTC.
They pledged to cooperate with the SEC, and acknowledged the facts attributed to them by the CFTC, which should earn them, in both cases, a more lenient judgment. The CFTC estimates the total amount of funds misappropriated from FTX client accounts to be $8 billion.