Introduction
Samuel Bankman-Fried, the former chief executive of FTX, a global cryptocurrency exchange, was arrested by Bahamian authorities under an extradition warrant on the eve of his scheduled testimony before the House Financial Services Committee. A federal grand jury indictment in the Southern District of New York triggered his arrest. The indictment charges him with campaign finance offenses, money laundering, wire fraud, and conspiracy, including conspiracy to commit commodities and securities fraud. The wire fraud and money laundering offenses are punishable by imprisonment for not more than 20 years and the campaign finance, commodities, and securities offenses by imprisonment for not more than five years. The indictment also suggests the possibility of the confiscation of cash and other real and personal property related to the offenses. The Securities and Exchange Commission and the Commodity Futures Trading Commission have each begun civil proceedings. FTX and its related entities are the subject of bankruptcy proceedings.
Allegations
The indictment, accompanying press release, congressional testimony, and media accounts together suggest that Bankman-Fried and others in FTX management employed a cavalier, self-serving management style akin to embezzlement. The indictment asserts that Bankman-Fried and unnamed confederates schemed to defraud FTX customers and lenders in order to engage in speculation and to pay for the expenses and debts of a proprietary crypto hedge fund in violation of federal wire fraud, money laundering, and conspiracy statutes.
Other counts in the indictment charge conspiracy to commit commodities fraud and securities fraud based on misleading and materially false statements to customers and investors. The conspirators' alleged engagement in deceptive financial transactions supports the indictment's money laundering count. The general conspiracy count encompasses plots to impair the functioning of a federal agency, such as the Federal Election Commission, by deceitful or dishonest means. This ensnarled the conspirators, who allegedly used straw men and other deceptive practices in an effort to evade limits on campaign contributions and corporate contributions in violation of federal campaign finance laws. Contributions reportedly went principally to Democratic campaign funds, although some appear to have flowed to Republican beneficiaries as well.
Defendants must surrender for confiscation property derived from or traceable to these offenses. The government may distribute confiscated property to the victims of the offense.
Extradition
Authorities in the Bahamas arrested Bankman-Fried in response to an extradition treaty request from the United States. His situation is governed by the treaty and local law. He is free to waive undergoing formal extradition proceedings before being surrendered to the United States. Thus far, he has not. His request for bail has been denied, and he is being held in prison in the Bahamas. Should he waive extradition he would be entitled to petition for pretrial bail upon his return to the United States.
The extradition treaty in place features a dual criminality requirement that calls for the surrender of any fugitive charged with a serious crime punishable under the laws of each country. Like most recently negotiated extradition treaties, the agreement contains provisions designed to eliminate the dual criminality obstacles raised by the jurisdictional elements in federal crimes. Bankman-Fried is not a citizen of the Bahamas, but his citizenship would be no bar to extradition if he were. Extradition proceedings can take years to complete.
Had Bankman-Fried chosen to appear in person to testify before the House committee, he could have been arrested under the indictment without the need for an extradition request. Consequently, he would likely only have agreed to testify remotely. Bankman-Fried's incarceration complicates any efforts to secure even his remote appearance in subsequent criminal, administrative, or bankruptcy proceedings. Such efforts necessarily involve approval of a foreign nation to permit U.S. proceedings that occur in part within its territory and under procedures rendering the secured testimony admissible in U.S. proceedings. (For further discussion, see CRS Report 94-166, Extraterritorial Application of American Criminal Law.)
Congressional Options
Although extradition is largely a matter of treaty, it is attended by a statutory framework within the control of Congress. Congress may wish to consider legislation requiring an adjustment when the Justice Department plans to request an arrest for extradition purposes of a witness scheduled to appear before a congressional committee. The issues raised by the indictment might also prompt congressional examination more generally of laws governing cryptocurrency that relate to securities regulation, commodities trading, and bankruptcy but are unrelated to extradition. These topics are described in other CRS products, including CRS Report R46208, Digital Assets and SEC Regulation; CRS Insight IN12047, What Happened at FTX and What Does It Mean for Crypto?; and CRS Legal Sidebar LSB10832, Crypto Assets and Property of the Bankruptcy Estate: An Analysis.