It is generally accepted in international law that a state is under no obligation to hand over an alleged criminal to another state. This is due to the fact that one of the tenets of sovereignty is that every state has the ability to exercise legal authority over its own citizens who are located within its borders. As a result of this lack of international obligation and the desire for the right to demand such criminals from other nations, a web of extradition treaties or agreements has developed over the years. In the event that there is no existing extradition agreement that is applicable, a sovereign may still request the expulsion or lawful return of an individual in accordance with the domestic law of the state that was requested.
This may be accomplished through the immigration laws of the state that is being requested or through other aspects of the domestic law of the state that is being requested. In a similar vein, the codes of penal procedure in many countries contain provisions that make it possible for extradition to take place even when there is no extradition agreement in place. Therefore, even in the absence of an extradition treaty, sovereign states still have the ability to request that fugitives be expelled or lawfully returned to their home territory from the territory of the requested state.
The United States has remained a dominant figure as far as extradition cases have been concerned. This has been largely due to the number of countries the US has an extradition treaty with along with the dominance of the country. When one nation refuses to hand over criminal suspects or convicted felons to another, it can put a strain on relations between the two countries. Frequently, the nation to which extradition is being denied will accuse the other nation of basing its decision to deny extradition on political considerations, thus, countries want to be in the good books of others like the US and would often yield to extradition requests.
If all else fails, there have been abductions and extraordinary renditions of certain suspects. In some instances, the US has abducted an alleged criminal from the territory of another state, either after the standard extradition procedures have been attempted and failed, or without even attempting to use them.
With the sheer volume of extradition cases involving the US, it is almost impossible to keep tabs on every single one, however, some have been labelled as high-profile and garnered more attention for members of the public and other authorities. One of such is the recent case of Sam Bankman-Fried, the founder of one of the largest crypto exchanges in the world; FTX.
Sa, Bankman-Fried, also known as SBF, and Gary Wang, a former Google employee, co-founded FTX in May 2019 with Hong Kong as the company’s initial headquarters. Bankman-Fried was able to easily raise capital for his new venture thanks to his established reputation as a skilled trader at Alameda. The exchange had prominent early-stage investors such as Pantera Capital, Sequoia Capital, Digital Currency Group, rival Binance and its venture arm, Binance Labs, and Consensus Labs. SBF was able to raise $8 million in a seed round, which they completed in August of that year.
Bankman-Fried did well to ride the wave of new interest, but by the fall of 2020, centralized crypto exchange FTX needed more than a solid reputation to survive. FTX daily volume had occasionally surpassed $1 billion at the time, but this was not the case very often.
The firm initiated “fractionalized stock trading” in October 2020 for derivatives of Tesla, Apple, and Amazon. In 2021, it secured partnerships with the likes of the Mercedes-AMG Petronas F1 team, the Miami Heat and the Golden State Warriors of the NBA, the esports teams Furia and Team SoloMid, the naming rights to the stadium at the University of California, Berkeley for a decade, MLB umpire uniforms, the Washington professional sports teams owned by Monumental Sports & Entertainment, and the makers of League of Legends, Riot Games.
In November 2022, damaging reports about Bankman-trading Fried’s desk, Alameda Research, showed that it had billions in FTT on its balance sheet against billions in liabilities, and this was the beginning of the public unravelling of FTX.
It did not take long for investors to figure out that Alameda was stuck: redeeming its FTT to pay off its debts would have a devastating effect on the value of the token. Not doing so would result in it receiving default notices from its creditors for failing to make payments on time.
Binance CEO CZ said the company would sell its $580 million FTT hoard to avoid repercussions. Even though the company failed to sell many tokens, the ensuing panic caused billions to be removed from FTX’s exchange. As a result, FTX has temporarily suspended withdrawals. It entered into a temporary, nonbinding agreement to be acquired by Binance. However, the agreement collapsed just one day after being announced. As a last resort, Bankman-Fried stepped down, and on November 11 FTX filed for bankruptcy. The company stated in the filing that it has debts of $10 billion to $50 billion.
Bankman-Fried was arrested on December 12 in the Bahamas on eight charges, including wire fraud and conspiracy to commit money laundering, following a frenzied media tour in which he repeatedly denied any wrongdoing and said he had not intentionally mixed client and company funds. Bankman-Fried faces a maximum of 115 years in prison if convicted on all eight counts and sentenced to serve each charge consecutively.
A grand jury in Manhattan federal court indicted Bankman-Fried on December 13 for allegedly stealing customer funds to plug losses at his crypto hedge fund, Alameda Research. Bankman-Fried was arrested on December 13 in the Bahamas, where he resides and where FTX was based. He initially told a Bahamian court he would contest extradition, however, he reversed this decision and signed papers to willingly be extradited to the US.
Prosecutors have called the allegations against Bankman-use Fried’s of FTX customer deposits a “epic fraud.” He is accused of using the funds to fund his Alameda Research hedge fund, acquire real estate, and make millions of dollars in political contributions. After his extradition from the Bahamas, where he resided and the exchange was located, Bankman-Fried was released on a $250 million bond. Bankman-attorneys Fried’s have asked the court to protect the identities of two wealthy individuals who have agreed to post bail for their client. In addition to granting the prosecution’s request to extend Bankman-bail Fried’s conditions and ban him from accessing or trading any FTX or Alameda assets, the judge also said he would revisit the decision if there were objections.
The rarity of these circumstances cannot be overemphasised. With the reports and circumstances surrounding the majority of the US extradition cases in the past and recently, giving bail terms to an extradited suspect with of such a degree almost seems like a new phenomenon and would have been regarded as impossible in the past. Even when cases involved prominent figures like the deputy chair of the board of Huawei, Meng Wanzhou, she was placed under house arrest until finally acquitted of the charges against her.
As a condition of his release, Bankman-Fried is required to reside with his parents in their Palo Alto, California, home. In addition, he was ordered not to engage in any financial transactions greater than $1,000 and to get drug and mental health counseling. Extradition cases in the past have been notorious for severing suspects from contact with family members and friends. According to Human Rights Watch’s interview with a family member, Masud’s family was only made aware of the extradition after seeing social media posts about his December 12 court appearance. After he was transferred from Libya to the United States, his family claimed they were unaware of any legal proceedings preceding the transfer and only spoke to him over the phone for the first time on February 10.
Many reports suggest that multiple investigations are underway and the reason why SBF has not been jailed is that he pleaded not guilty and the investigations have to be completed. He has gone on to engage in several interviews and speak out whenever he has gotten the opportunity whether with the country’s premier newspapers or on crypto podcasts or in random Twitter Spaces.
On Substack, he started a newsletter and has published two articles defending his leadership at FTX: The first presented his own version of FTX’s balance sheet and argued that despite the exchange’s official insolvency, its American subsidiary is still financially sound. Aside from that, he claims that FTX’s international division “retains significant assets-roughly $8b of assets of varying liquidity.” An enormous portion of FTX’s assets was in crypto tokens that FTX had created, which did not actually trade in high volumes and whose value was tied directly to confidence in FTX’s businesses, which is why the term “varying liquidity” is doing a lot of work there. Second, the SBF Substack post argues that the company’s legal team is exaggerating the gravity of the situation.
The handling of SBF’s case has been labelled as softhanded by multiple observers, members of the public and judicial authorities. However, some have asserted that the links the company had to the Bahamas as its headquarters have added various complicating factors to this case and the complexity of the crypto space is another contributing factor. However, the fact remains that SBF has managed to stay out of jail and has been treated in a more civil way compared to other extradited suspects for financial and white-collar crimes.
This begs the question of whether this is a new era of extradition procedure and circumstances in the US or more friendly conditions based on his citizenship and consented extradition. As the case unfolds, these speculations will be better clarified.
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