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Sam Bankman-Fried changes his mind about extradition, will return to the US

Sam Bankman-Fried is swapping his Nassau prison cell for a federal detention center in Brooklyn after he agreed to be extradited to the United States. The 30-year-old former high-flying CEO of defunct digital asset exchange FTX stands accused of misappropriating millions (possibly billions) of dollars in customer funds to cover external investments and trading losses at his other firm, Alameda Research.

The decision marks a swift strategy reversal for Bankman-Fried, commonly known as “SBF.” Just a week after his legal representatives claimed he would fight any extradition attempt, Bahamian authorities scheduled a hearing for February 8, 2023. He was finally arrested last week following FTX’s disorderly collapse a month ago, after weeks of speculation over his fate.

Meanwhile, FTX’s 1.2 million registered customers in the U.S. and around the world are still wondering if they’ll ever see their money again. Withdrawals remain suspended for FTX.com and its international subsidies. This includes the FTX Trading Limited (formerly Liquid) exchange in Japan, which remains in limbo as a second “restoration attempt” prepares to re-enable customer wallets. It’s estimated the FTX group owes its creditors worldwide US$3.1 billion.

SBF has denied any conscious wrongdoing, blaming FTX’s collapse instead on his naivety and overconfidence. He engaged in lengthy Twitter threads and interviews apologizing to customers for their losses, promising to do everything he could to make them whole again.

However, most former customers appeared to want nothing more from SBF than to see him incarcerated for a long time. They may get their wish. U.S. Attorney for the Southern District of New York Damian Williams called the case one of the largest frauds in U.S. history. The Securities and Exchange Commission accused Bankman-Fried of building a “house of cards on a foundation of deception.”

SBF had appeared eager to fight extradition even until Monday when he appeared in court “visibly shaking” to the surprise of his own lawyers—who hadn’t expected him to either appear in person or change his mind about fighting to stay in the Bahamas. SBF signed the extradition papers in the Bahamas and is expected to return to the U.S. via a federal aircraft on Wednesday.

Harsh conditions at Bahamas jail

The thought of spending more time locked up in Nassau’s Fox Hill correctional facility may have tipped SBF’s preference in favor of a U.S. cell, despite reportedly being given his own room at Fox Hill’s medical center.

The Bahamas has one of the highest GDPs per capita in the Americas, and its global image is that of a tourist destination and financial services center. Photos of SBF’s US$40 million five-bedroom penthouse apartment with pool (now reportedly listed for sale) depict a life of luxury for those fortunate enough to work in the latter industry.

The country’s luxury tropical playground appeal has another side, though, as it also has one of the world’s highest per-population incarceration rates. Despite this, there’s only one jail for the whole country, meaning Bankman Fried’s world merged abruptly with the Bahamas’ lower echelons. Conditions at Fox Hill are said to be harsh and overcrowded. Human rights groups in the past have described the jail as unsanitary, with frequent infestations of rats and even maggots.

SBF had initially used his veganism as an argument to be released on US$250,000 bail, but the court deemed him too great a flight risk and denied the request.

Bankman-Fried’s options to maintain a relative level of comfort and freedom appear to be dwindling as he faces spending the rest of his life in jail without parole should a U.S. court eventually convict him on the eight charges he’s facing. 

He had made millions in donations to political campaigns in the U.S., openly to Democratic Party representatives but also in equal amounts (by his own admission, more hushed) to the GOP. Whether this translates into any favorable deals down the track may depend on who lost money and whose images have been tarnished most by the whole scandal.

Follow CoinGeek’s Crypto Crime Cartel series, which delves into the stream of groups—from BitMEX to Binance, Bitcoin.com, Blockstream, ShapeShift, Coinbase, Ripple,
Ethereum, FTX and Tether—who have co-opted the digital asset revolution and turned the industry into a minefield for naïve (and even experienced) players in the market.

New to Bitcoin? Check out CoinGeek’s Bitcoin for Beginners section, the ultimate resource guide to learn more about Bitcoin—as originally envisioned by Satoshi Nakamoto—and blockchain.

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