FTX founder arrested in the Bahamas and faces potential extradition to the United States

On 13 November 2022, Gherson’s criminal litigation, investigations and regulatory team wrote a blog entitled will anyone be extradited to the US amid FTX collapse investigation?

This was pre-dated by reports at that time, including by Bloomberg, that the US may extradite an individual, specifically Sam Bankman-Fried, in light of the collapse of FTX.

FTX was one of the world’s largest cryptocurrency exchanges, which has recently collapsed, and it is reported that investigation and prosecution agencies across various jurisdictions are investigating.

On 13 December 2022, it was reported that Sam Bank-Fried had been arrested in the Bahamas on US criminal charges and could face potential extradition.

We now look back over previous examples of where the US have extradited individuals in relation to crypto allegations.

Previous US extradition cases involving crypto

On 17 August 2022, the U.S. Department of Justice, U.S. Attorney’s Office, District of Oregon, announced that an alleged cryptocurrency-money launderer was extradited from the Netherlands to the United States (“US”). The accompanying press release concerning this latest extradition states as follows: “According to the indictment, between at least August 2018 and August 2021, [the individual] and his co-conspirators are alleged to have knowingly and intentionally laundered the proceeds of ransomware attacks on individuals and organizations throughout the United States and abroad”.

This follows an individual being extradited from Greece to the US on allegations of money laundering involving an illicit Bitcoin Exchange. On 5 August 2022, the US Department of Justice announced the successful extradition of an individual from Greece to the US. This individual is alleged to have operated BTC-e, a cryptocurrency exchange that laundered more than $4 billion of criminal proceeds. 

It is clear that the US is increasingly holding to account individuals outside of the US that are alleged to have been involved in cryptoassets-based crime that have allegedly had an effect in the US.

This can happen even if the individual has not stepped foot in the US.

In the right circumstances, prior to issuing an extradition request, a jurisdiction could also utilise INTERPOL and a Red Notice to locate an individual and seek their arrest for alleged crypto offences.

International dimension of offences involving crypto

As was discussed in a previous blog entitled “Can I be extradited for allegations involving crypto?”, due to the borderless nature of crypto transactions, any allegation of criminality will inevitably involve multiple jurisdictions. As such, there may be numerous countries asserting their right to extradite an alleged perpetrator to their jurisdiction to face justice. 

The vast majority (if not all) of criminal allegations that underpin a crypto criminal investigation are of a financial-crime nature, e.g. fraud, money laundering and insider dealing.

These offences, by their very nature, can take place across multiple jurisdictions and are therefore types of offences for which multiple countries can assert jurisdiction, including in relation to those committed outside their own country (hence extradition can be an option). 

Indeed, due to the borderless nature of the effect of these crimes, a country could assert jurisdiction against an individual who has not even stepped foot in it.

As such, jurisdictions might additionally utilise INTERPOL to locate an individual and seek their arrest prior to issuing any extradition request.

Asserting jurisdiction for cross-border allegations

It is generally accepted that the US’s reach in these types of cases is far extending. Indeed, so long as there is some aspect of the case which is alleged to have taken place in the US, there is the risk of criminal charges being brought in the US, and therefore extradition to the US.  This could be applicable to other jurisdictions.

Indeed, the issue of extra-territorial reach and extradition for financial-crime offences has been previously discussed by our team in a separate blog entitled “Meng Wanzhou Huawei extradition and cross-border allegations”.

The Gherson team have also previously argued that there is potentially an imbalance between the US and UK jurisdictional reach in relation to specific financial crime offences.

International crypto dimension – criminal investigations, litigation and extradition

Those who fear they may be subject to an extradition request from the UK, or who are just concerned about liability across multiple jurisdictions including the UK, should get in touch.

Gherson’s criminal litigation, regulatory and investigatory team combine an expert knowledge of criminal and regulatory law underpinned with a firm understanding of digital assets and blockchain technology. As such, the team is able to provide expert strategic advice to anyone facing investigation in relation to any allegation of criminality involving cryptoassets. Working alongside the extradition team, Gherson’s criminal litigation, investigations and regulatory team is able to provide an unparalleled service in any case with an international dimension. The team is also able to call upon lawyers in multiple other jurisdictions and build multi-jurisdictional teams to assist with any suitable defence.

INTERPOL, Red Notices and crypto

In addition, those who fear that a jurisdiction may have requested INTERPOL to process data relating to them concerning any allegations of offences involving crypto, or are just worried about potential liability, should get in contact.

Indeed, Gherson Solicitors continue to receive requests for expert advice and assistance from those who fear they may have outstanding financial issues arising. That advice tackles:   

1. How to best approach a possible INTERPOL red notice;
2. Preparing for potential criminal proceedings / an extradition request;
3. Preparing for a situation where a civil matter or commercial dispute could be used to initiate bogus criminal proceedings; and
4. Even exploring the possibility of instigating civil litigation proceedings to recover any misappropriated assets.

Gherson have previously written a series of blogs designed to assist those who fear they might be subject to INTERPOL measures (including a Red Notice):

INTERPOL and Red Notice Challenges

How to Remove an INTERPOL Red Notice

INTERPOL Red Notices and Extradition

How do I know if I am subject to an INTERPOL Red Notice

Regulation and compliance

In these constantly changing times, firms that deal with cryptoassets, and additionally have exposure to firms dealing with cryptoassets, will need to carefully consider all their systems and controls to ensure that they are able to comply with all relevant AML and sanctions regulations. 

How Gherson can assist

Gherson’s white-collar crime and regulatory team are able to provide advice and assistance with AML and sanctions compliance, including in situations involving cryptoassets. 

Additionally, the team has recently started a series on the regulation of crypto, with the aim of advising those who work in the compliance of this sector. Furthermore, for those who would like advice on relevant issues, including those who have had issues with the FCA registration process, our specialist regulatory and compliance team can guide individuals and companies through the process.

Please do not hesitate to contact us for further advice, send us an e-mail, or, alternatively, follow us on Twitter, Facebook, or LinkedIn to stay up-to-date.

The information in this blog is for general information purposes only and does not purport to be comprehensive or to provide legal advice. Whilst every effort is made to ensure the information and law is current as of the date of publication it should be stressed that, due to the passage of time, this does not necessarily reflect the present legal position. Gherson accepts no responsibility for loss, which may arise from accessing or reliance on information contained in this blog. For formal advice on the current law please do not hesitate to contact Gherson. Legal advice is only provided pursuant to a written agreement, identified as such, and signed by the client and by or on behalf of Gherson.

©Gherson 2022

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