New York
CNN
 — 

Lawyers for Sam Bankman-Fried are negotiating with federal prosecutors in New York on a bail arrangement that would enable him to avoid detention, people familiar with the matter told CNN.

FTX crypto exchange founder Bankman-Fried, who oversaw his now-bankrupt crypto empire from a luxury compound in the Bahamas, is expected to return as early as Wednesday to the United States. Federal prosecutors in the US have charged him with orchestrating “one of the biggest financial frauds in American history.”

Once the 30-year-old is in the US, Bankman-Fried will appear before a judge in Manhattan for a bail hearing. The timing of that hearing will depend on when he arrives in New York and is processed.

In the week and a half since his arrest in the Bahamas, Bankman-Fried has been held in a prison that US officials have described overcrowded, dirty and lacking medical care. Its crowded cells often lack mattresses and are “infested with rats, maggots, and insects.”

Prosecutors and attorneys for Bankman-Fried are discussing an arrangement for his release, with conditions, that would enable the failed crypto entrepreneur to avoid spending time at the Metropolitan Detention Center. The MDC is a pre-trial holding facility that former inmates and rights advocates have described as inhumane, citing frequent lockdowns, overcrowding and power outages that have left it without heat in the middle of winter.

Federal prosecutors last week charged Bankman-Fried with defrauding investors and customers of FTX, which he founded in 2019. If convicted on all eight charges of fraud and conspiracy, he could face life in prison.

FTX and its sister trading house, Alameda, both filed for bankruptcy last month after investors rushed to pull their deposits from the exchange, sparking a liquidity crisis.

In the weeks since their bankruptcy, FTX’s new CEO has stated publicly that customer funds deposited on the FTX site were commingled with funds at Alameda, which made a number of speculative, high-risk bets. The CEO, John Ray III, described the situation at the two companies as “old-fashioned embezzlement” at the hands of a small group of “grossly inexperienced and unsophisticated individuals.”

This story is developing. It will be updated.

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