Investors Will Demand a Scape-Goat
There has been much talk recently about Sam Bankman-Fried, the 30 year old founder of FTX. FTX was a major crypto exchange. It collapsed last week. Customers are thought to be owed as much as $10 billion. Many in the media are accusing Sam Bankman-Fried of fraud.
At this early stage nobody outside the company knows the true story. Only Bankman-Fried and his associates know if this was a fraud or not. He appears to be well connected in US political circles. However, given the scale of the losses this is unlikely to save him. Whether Bankman-Fried committed fraud or not a scape goat will be demanded.
Anyone in his position will have been thinking of options. Probably for quite a while. The types of liquidity issues faced by FTX don’t just appear out of the blue. Sam Bankman-Fried is likely to have had months or even years to plan his escape.
It’s said he’s currently based in The Bahamas. That’s no safe haven from a US arrest warrant. The media reported this week that his private jet had flown to Argentina. Bankman-Fried denied this and claims still to be in The Bahamas. He has also said that he will travel to the US to face any questions.
So, what are the options for Sam Bankman-Fried to avoid extradition to the US?
The Argentina angle is intriguing. On the face of it, Argentina has an extradition treaty with the US. There’s no doubt he’d be extradited from Argentina to the US as a US citizen.
But what if he somehow got Argentinian citizenship? That’s not an outlandish prospect. Argentina hasn’t updated its citizenship laws in decades. There are several ways to get a fast citizenship there, perfectly legally.
If Bankman-Fried managed to become Argentinian in a legitimate way then he may be safe there. Argentina is amongst countries that don’t extradite their own citizens.
Many other countries refuse to extradite their own citizens too. If he saw the storm coming and planned for this kind of scenario in advance he will have more than one safe haven.
Given the vast resources he had access too, it would be crazy not t have had an insurance policy in place. That insurance policy would take the shape of multiple citizenships and residences.
The citizenships should be from countries that refuse to extradite their own nationals. Some countries differentiate between naturalised citizens and birth citizens. Most don’t bit if he thought this through in advance he’ll have been advised on this too.
Non Extradition Countries
There are dozens of countries that don’t have extradition treaties with the US. In the case of Sam Bankman-Fried he may face criminal charges in multiple jurisdictions as FTX operated worldwide. So, in his case the citizenship from a country that doesn’t extradite its own nationals would work best.
However he may opt to go somewhere such as China, Russia or The Maldives that don’t have extradition treaties with the US. His high profile will work against him, though. Unless he had residencies in nonextradition countries set up in advance it will be difficult to achieve. The main danger for those who try to avoid extradition and turn up in the non-extradition country without residency is deportation. That’s the easiest option for countries seeking to extradite their nationals. It’s also the easiest option for the host country as it avoids drawn out extradition hearings. Mr Bankman-Fried should have planned his escape well in advance.
Conclusion
Sam Bankman-Fried faces a difficult bot not impossible situation. His high profile and the level of accusations against him will make his situation more challenging. He faces tough decisions about whether to return to the US to face the music or sit it out somewhere safe. This will likely depend on whether he has insurance in place in advance in terms of residencies and citizenships. It’s much more difficult to buy insurance after the fire has started.
