FTX: Sam Bankman-Fried staying in the Bahamas

Many rumors began circulating yesterday about the possibility that FTX co-founder and former CEO Sam Bankman-Fried (SBF) would be extradited to the US. 

SBF was arrested in the Bahamas a few days ago, but being a US citizen he could be extradited to the US. 

Several court cases are pending against him, both in the US and the Bahamas, but most of the plaintiffs are from the US. 

FTX, the arrest of Sam Bankman Fried

SBF is accused of being somehow responsible for the collapse of FTX, the crypto exchange that closed its doors just before mid-November because it was insolvent. 

Many charges hang over his head, including fraud. 

FTX was based in the Bahamas, and SBF was physically located there when the case broke. After all, the group’s central operating office was precisely in Nassau, the capital of the Bahamas, so it is more than obvious that SBF was located there. 

Once the case broke out, unlike others involved, SBF decided to stay in the Bahamas and not flee. After several weeks of investigation, last week came the arrest order executed by Bahamian law enforcement. 

So at first SBF was jailed in the Bahamas, apparently with little desire to be extradited to the US. 

In fact, it is worth noting that the crimes charged against him were largely committed in the Bahamas, and that the Bahamian judiciary was the first to issue charges against him. So it was not at all absurd to imagine that he might not be extradited. 

The extradition of Sam Bankman Fried

Even the day after his arrest, he was supposed to attend a hearing in Washington at a congressional committee, attended by the new CEO of FTX, who is leading the restructuring and liquidation process. 

It may not be a coincidence that Bahamian authorities decided to arrest him, because they may have feared that SBF would take advantage of the hearing in Washington to leave the Bahamas and never return. Then again, his accomplices have fled the Bahamas, so it is more than legitimate that the local judiciary feared an escape. 

At first, it appeared that SBF was not intent on seeking extradition to the US. Moreover, Bahamian authorities seemed to intend to detain him in the country so that he could be tried. 

Yesterday was the turning point. Several rumors began to follow that he had requested and obtained extradition to his home country. 

The backtrack

It even seemed like a done deal, so much so that it was believed he could move to the U.S. as early as yesterday. It is worth noting that the Bahamas practically borders the US, although it is an island, such that it takes less than an hour and a half by air from Nassau to Miami, the nearest US city. 

Instead, as CNBC reports, SBF was sent back to a Bahamian jail yesterday, with a chaotic scene in court after the plan to waive extradition to the US stalled. 

According to some local media reports, SBF had agreed to extradition yesterday, instructing his lawyer to proceed with the hearings. Instead, he is now expected to return to court in the Bahamas by the end of this week.

A video is also circulating of SBF returning to court, visibly shaking. His defense attorney said he was “shocked” that Bankman-Fried was back in a Bahamian court.

The situation now seems very uncertain, if not chaotic. 

Then again, it is not common in the Bahamas for the judiciary to become involved in judicial matters of this magnitude. 

In fact, it is quite likely that US authorities are lobbying hard to try to have SBF extradited to the US so that he can be tried there. 

Imprisonment in the Bahamas

It is worth adding that the Bahamian prison where SBF is incarcerated, Fox Hill, has a very bad reputation. 

SBF comes from an affluent family, and when he was in charge of FTX he was accustomed to spending huge sums of money with ease, with which he certainly did not lack comfort. 

So not only is it normal that he is not at all well off in Fox Hill, so much so that he willingly accepted extradition, but it is also quite understandable that he is shaken and strained. 

According to a 2020 report by the US State Department, living conditions in Fox Hill prison are said to be harsh, due to overcrowding, poor food, inadequate sanitation, poor ventilation and inadequate medical care.

It is worth mentioning that SBF is vegan, so much so that it appears that the warden of Fox Hill prison received requests, if not outright pressure, from SBF’s powerful friends and relatives trying to persuade him to feed him a diet in line with his preferences. However, it is not known whether these requests were then actually granted. 

SBF’s friends

SBF has made many friends over the years. 

Alameda Research was founded in 2017, but it was with the founding of FTX in 2019 that he began to have access to huge amounts of money from the exchange’s customer deposits. 

In theory, he should not have used those funds as if they were owned by the company, but apparently he did. While this was at the root of FTX’s failure, for a few years it allowed SBF to spend absurd amounts of money, for example, to make many friends. 

In particular, he donated many millions of dollars to US election candidates in both 2020 and 2022. Most of these donations seem to have gone to Democratic politicians, and it is precisely in this area that SBF had managed to make many friends. 

This is evidenced, for example, by the far too kind treatment he received from the Democratic chairman of the House Financial Services Committee who had requested his presence at last week’s hearing. 

In fact at first, SBF had actually declined the invitation while still a free man and Chairman Waters’ reaction to this refusal had been all too soft. 

SBF also managed to involve many celebrities, including the very famous Tom Brady, in his extensive plan to promote the exchange. 

In other words, by means of donations, funding, financial aid, handouts, and sponsorship contracts he made many friends, while spending money that was not his own but belonging to his exchange customers. 

For this reason, it is believed that he may still have many friends in the US who could help him during the process. 

It is worth mentioning, however, that this is not the first time that such things have happened in the US, and often in these cases, such friends have then gone AWOL after clear and unequivocal crimes emerged. 

Indeed, in some respects, the SBF affair is reminiscent of Bernie Madoff, who later ended up being sentenced to 150 years in prison and abandoned by all the many friendships he had collected over time. 

It is not possible to know a priori how much help SBF might have in the US now, but it is likely that he has very little in the Bahamas. Hence, it is possible that his eventual extradition could have many more benefits than drawbacks for him.