FTX Founder Bankman-Fried Denied Bail in Bahamas After Arrest, Faces Up to 115 Years in Jail

FTX founder Sam Bankman-Fried (2nd L) is led away handcuffed by officers of the Royal Bahamas Police Force in Nassau, Bahamas, on Dec. 13, 2022. (Mario Duncanson/AFP via Getty Images)

Sam Bankman-Fried, the founder and former CEO of the failed cryptocurrency exchange FTX, has been denied bail after his Dec. 12 arrest in the Bahamas at the request of the U.S. government.

In a hearing that lasted more than three hours on Dec. 13, Chief Magistrate Joyann Ferguson-Pratt denied Bankman-Fried’s $250,000 bail request, citing a heightened flight risk because of the former billionaire’s access to financial resources.

The judge ordered the 30-year-old to be remanded to Bahamian custody until Feb. 8, 2023.

Bankman-Fried was arrested by Bahamas law enforcement at the request of the U.S. attorney for the Southern District of New York, who notified the Bahamas Attorney General’s Office that it had filed criminal charges against the former crypto billionaire, who once had an estimated net worth of $26 billion.

An extradition treaty has been in place between the United States and the Bahamas since 1994. Bahamas Attorney General Sen. Ryan Pinder said the United States would likely request Bankman-Fried’s extradition and he intends to quickly process it. Bankman-Fried’s legal team reportedly told the court they plan to fight any extradition order to the United States.

Attorneys for the Southern District of New York announce the indictment of Samuel Bankman-Fried in New York on Dec. 13, 2022. (Stephanie Keith/Getty Images)

“Mr. Bankman-Fried is reviewing the charges with his legal team and considering all of his legal options,” Mark Cohen, legal counsel to Bankman-Fried, stated in an email.

Prosecutors Announce Multiple Charges

Prosecutors and regulators including the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) have filed charges against Bankman-Fried, including wire fraud, as well as conspiracies to commit wire fraud, commodities fraud, securities fraud, money laundering, and fraud against the United States.

He faces up to 115 years behind bars if he’s convicted of all eight charges.

SEC Chair Gary Gensler said the former FTX boss “built a house of cards on a foundation of deception while telling investors that it was one of the safest buildings in crypto” and orchestrated a scheme to defraud equity investors in FTX.

The CFTC has charged Bankman-Fried with fraud and material misrepresentations and claimed that his actions prompted the loss of over $8 billion in FTX customer deposits. In a statement, the CFTC accused FTX of commingling customer funds with that of its sister hedge fund, Alameda Research.

According to an indictment (pdf) unsealed on Dec. 13, U.S. prosecutors allege that Bankman-Fried engaged in a scheme to defraud FTX’s customers by misappropriating those customers’ deposits and using them to pay the expenses and debts of Alameda Research.

They also accuse him of making “tens of millions of dollars in illegal campaign contributions” to both Democratic and Republican candidates and campaign committees that were not under his name, according to Damian Williams, the U.S. attorney for the Southern District of New York.

Bahamas-based FTX was once valued at $32 billion after raising $400 million from investors in the latest round of funding, and Bankman-Fried became known for his philanthropic lifestyle, becoming the second-largest individual donor to the Democratic Party, while also claiming to have contributed a similar amount to Republicans.

FTX founder Sam Bankman-Fried speaks virtually during The New York Times DealBook Summit in the Appel Room at the Jazz at Lincoln Center in New York on Nov. 30, 2022. (Michael M. Santiago/Getty Images)

Bankman-Fried Denies Committing Fraud

However, in November, the crypto exchange spectacularly collapsed amid a liquidity crisis after it was revealed that Alameda had been using FTX customer assets to keep it propped up. A potential rescue deal by larger rival Binance was subsequently pulled and traders rushed to pull billions from the platform.

FTX filed for bankruptcy protection on Nov. 11. Millions of people who used the exchange have been left unable to access their crypto wallets.

According to a court filing, FTX owed its 50 largest creditors almost $3.1 billion.

Despite the exchange’s collapse, and looming questions regarding billions in missing funds, Bankman-Fried has continued to give interviews to various media outlets and recently spoke at The New York Times DealBook Summit on Nov. 30.

During such interviews, he has repeatedly denied committing any fraud at FTX but has admitted to making multiple “mistakes” while heading the company.

In an interview with the BBC published on Dec. 10, he revealed plans to set up a new business in an effort to pay back investors who have lost billions of dollars.

“I’m going to be thinking about how we can help the world and if users haven’t gotten much back, I’m going to be thinking about what I can do for them,” he said. “And I think at the very least, I have a duty to FTX users to do right by them as best as I can.”