Judge’s ploy to get Bankman-Fried extradited
A judge kept secret that two of Sam Bankman-Fried’s associates turned against him so the cryptocurrency entrepreneur wouldn’t fight extradition from the Bahamas, according to court transcripts made public Friday.
Federal prosecutors in Manhattan waited until Bankman-Fried, the founder of the collapsed crypto exchange FTX, was in FBI custody before revealing that his business partners, Carolyn Ellison and Gary Wang, had secretly pleaded guilty to fraud charges and were cooperating, which can earn them leniency at sentencing.
Manhattan U.S. Attorney Damian Williams announced the pleas when Bankman-Fried was in the air Wednesday.
Prosecutors had been concerned that if Bankman-Fried found out his friends were cooperating, he might try to fight extradition from the Bahamas, where he had been arrested at the request of U.S. authorities.
Ellison, 28, and Wang, 29, entered their guilty pleas in Manhattan federal court Monday to charges that carry a potential penalty of decades in prison.
At that hearing, Assistant U.S. Attorney Danielle Sassoon told the judge prosecutors had expected Bankman-Fried to consent to extradition Monday before there were “some hiccups in the Bahamian courtroom.”
“We’re still expecting extradition soon, but given that he has not yet entered his consent, we think it could potentially thwart our law enforcement objectives to extradite him if Ms. Ellison’s cooperation were disclosed at this time,” Sassoon told Manhattan Federal Judge Ronnie Abrams.
The judge got assurance from Ellison’s lawyer that there was no objection to the request before granting it.
“Exposure of cooperation could hinder law enforcement officials’ ability to continue the ongoing investigation and, in addition, may affect Mr. Bankman-Fried’s decision to waive extradition in this case,” Abrams said.
Bankman-Fried, 30, appeared in Manhattan Federal Court on on Thursday. He was released on the condition that he live under house arrest with his parents in Palo Alto, Calif. while awaiting trial.
The home where he was staying was protected Friday by heightened security, including a Stanford University security guard posted about 50 yards from the home to keep passersby away. The school’s president lives nearby.
Late Friday, Abrams recused herself from presiding over the case, saying she had learned that the law firm Davis Polk & Wardwell LLP, where her husband is a partner, had advised FTX in 2021 and had represented parties that may be adverse to FTX and Bankman-Fried in other proceedings.
She said her husband has had no involvement in any of the representations and she has no knowledge of the confidential matters, but decided to recuse herself “to avoid any possible conflict, or the appearance of one.”