FTX founder Sam Bankman-Fried arrived in a U.S. courtroom for an initial appearance on Thursday after being extradited from the Bahamas to face fraud charges, the first step in what could be a lengthy criminal case over the collapse of the bankrupt cryptocurrency exchange.
At the appearance in Manhattan federal court, known as an arraignment, Bankman-Fried is expected to be asked to enter a plea. Prosecutors have accused him of stealing billions of dollars in FTX customer funds to plug losses at his hedge fund, Alameda Research.
The judge could also determine whether to grant him bail, and if so, on what conditions.
Bankman-Fried, 30, was arrested last week in the Bahamas, where he lived and where FTX is based, cementing the one-time billionaire’s fall from grace. He departed the Caribbean nation in FBI custody on Wednesday night.
Bankman-Fried has acknowledged risk-management failures at FTX, but has said he does not believe he has criminal liability. At a court hearing in the Bahamas on Wednesday, his lawyer there, Jerone Roberts, read an affidavit in which Bankman-Fried said he had agreed to extradition in part out of a “desire to make the relevant customers whole.”
Just hours after his plane took off, U.S. prosecutors said two of his closest former associates had pleaded guilty and were cooperating with their probe – a move that significantly ramped up pressure on Bankman-Fried.
“If you participated in misconduct at FTX or Alameda, now is the time to get ahead of it,” Damian Williams, the top federal prosecutor in Manhattan, said in a video posted on Twitter on Wednesday night. “We are moving quickly and our patience is not eternal.”
A son of two Stanford Law School professors and a graduate of the Massachusetts Institute of Technology (MIT), Bankman-Fried rode a boom in the value of bitcoin and other digital assets to become a billionaire several times over as well as influential donor to U.S. political campaigns.
But in early November, reports that FTX commingled customer funds with Alameda led to a wave of withdrawals from FTX, ultimately prompting the exchange – valued at $32 billion as recently as January 2022 – to declare bankruptcy. Cryptocurrency exchanges like FTX allow users to buy and sell digital assets.
Bankman-Fried stepped down as CEO on Nov. 11, the same day as the bankruptcy filing.