Extradition of Sam Bankman-Fried to the United States
One of the most fascinating stories recently has been the collapse of FTX, the cypto-currency exchange founded by Sam Bankman-Fried (“SBF”). Following FTX’s collapse and the realization that billions of dollars of investor money disappeared, the US sought to have SBF extradited from the Bahamas, where SBF lived. This article analyzes the US criminal indictment and the US-Bahamas extradition treaty, which led SBF to agree to be extradited, rather than fight it.
The criminal charges
In December 2022, the US Justice Department filed criminal charges (the indictment) against SBF. The indictment included eight counts – or criminal offenses:
The US also sought to gain control of all the property located in the Bahamas that was related to the above criminal offenses.
To see a copy of the indictment, go to https://drive.google.com/file/d/18GkjqYX3a7i8JzOkmZNWwxNmSjunpA8e/view?usp=sharing
The US-Bahamas Extradition Treaty
Following the indictment, the US sought to have SBF extradited to the US.
In 1990, the United States and the Bahamas signed an extradition treaty (Treaty”). See a copy of the Treaty at https://drive.google.com/file/d/1Oe-NiX7AKYesUc1_2qkw-IyWoZVVqH5K/view?usp=sharing
Initially it was assumed that SBF would follow the advice of his lawyers and fight the extradition. However, a close examination of the Treaty and facts reveals why SBF changed his mind and agreed to be extradited to the US.
A. What criminal offenses give rise to extradition under the Treaty?
Under the Treaty, a person may be extradited to the US for an offense if it is punishable under the laws of both the US and Bahamas by a prison term of at least one year.
In the case at hand, the crimes set forth in the indictment clearly fall within the definition.
B. Place of the criminal activity
Under the Treaty, extradition is possible in one of two situations:
1. The offence was committed in the US.
This was the main argument that SBF could have made to avoid extradition to the US. SBF could have argued that he is a resident of the Bahamas, that FTX was based outside of the US, and that all the alleged criminal conduct was carried out outside the US. According to the indictment, makes clear, some of SBF’s activities took place in the United States. He made many presentations regarding FTX to people and companies in the US. He met with many US politicians in the US and made significant contributions to their election campaigns. Furthermore, many of FTX bank accounts were opened in the US.
Were these limited US activities sufficient to justify extradition? Why didn’t SBF at least try to fight this in Bahamas?
2. Where the offence was committed outside the US.
Insuch cases, the Bahamas may only extradite the person if the law of Bahamas provides for punishment of an offense committed outside of Bahamas in similar circumstances.
Thus, SBF and his lawyers could have argued that under Bahamas law, Bahamas would NOT seek to indict a person living abroad under similar circumstances.
In ordinary circumstances, a person, especially one with SBF’s wealth, would seek to avoid extradition to the US by putting up a legal fight that would last for years. In addition to the legal battle, that person might find ways to legally or illegally influence the local government to reach a conclusion that:
So why didn’t SBF fight the extradition? Two clear reasons:
The Bahamas took the side of the US and immediately acted in favor of America:
Bottom line, as opposed to a country located somewhere in Africa or Asia – outside the sphere of US influence – Bahamas made it clear whose side it was on. In weighing all these factors, SBF consented to his extradition on the condition that the US authorities agree to release him on bail pending trial, rather than have him imprisoned in the US. By agreeing to be extradited, he bought his freedom.
Foreclosure of assets
One final issue is that of foreclosure of property – or allowing the US to grab the assets of FTX and FTB in the Bahamas.
The Treaty reads as follows: Subject to Bahamas law, all property documents or other evidence relating to the offense shall be seized by Bahamas and given the US upon the granting of extradition.
As is clear from the Treaty, once a person has been extradited, all that person’s property is to be seized and given to the US, subject to Bahamas law.
Once again, the “subject to Bahamas law” is the key. Law is an ambiguous thing, which gives both sides to the dispute the chance to argue what Bahamas law says. Given the fact that the Bahamas was eager to cooperate with the US, one may assume that SBF had little wiggle room here. On the other hand, the assets he held were distributed around the world and were crypto currency that is hard to locate. SBF knew this, held relatively little assets in the Bahamas, and thus foreclosure was less of an issue.
To summarize, the case of SBF involves a classic legal analysis of the offence underlying the extradition request, the extradition request, and the many other factors that go into the decision-making process. Before making any decisions, a person facing possible extradition must weigh all these factors to achieve the best result.
If you or someone you know is subject to a US extradition request, please contact us for a free consultation.
#uscriminallaw
