Riccardo “Fluffypony” Spagni has been denied bail following his arrest in the United States after failing to convince a judge that he was not a flight risk.
Spagni was the lead maintainer of the privacy-focussed Monero cryptocurrency for five years. He stepped down in December 2019.
He launched a blockchain startup called Tari Labs in South Africa in 2018 that offered a free online university to aid open-source blockchain projects and train developers.
US law enforcement arrested Spagni in Nashville after the private jet he travelled on stopped to refuel while flying from New York City to Cabo San Lucas in Mexico to attend a cryptocurrency conference.
Spagni was arrested at the request of the South African government on the allegation that he failed to appear for his hearing in a fraud case brought against him by his former employer, Cape Cookies.
The US court emphasised that Spagni’s detention is subject to strict time limits.
The extradition treaty gives the South African government sixty days to submit the necessary documents to the United States for the extradition hearing.
The sixty-day period expires on 19 September 2021.
According to the court documents, Spagni is accused of defrauding Cape Cookies to the tune of R1,453,561.47.
Spagni was employed by Cape Cookies from 1 October 2009 to 8 June 2011 and allegedly intercepted invoices between the company and IT supplier Ensync.
He is accused of fabricating invoices from Ensync to Cape Cookies, placing the bank account details and VAT number of his own company on the documents.
The court documents state that Spagni inflated the invoice amounts, and it was found that Ensync’s actual invoices were then paid at a later date.
Spagni also stands accused of generating false invoices for three different fictitious IT suppliers.
He pleaded not guilty to the charges, then travelled to the United States after receiving an O–1 nonimmigrant visa to the United States.
This visa is awarded to individuals who demonstrate extraordinary ability or achievement.
According to the court documents, Spagni chose not to return to South Africa for his court date because he was afraid of potential exposure to Covid–19, which would hamper his plans to emigrate to the United States with his wife.
“In June 2020, Spagni’s counsel notified the [National Prosecuting Authority] that Spagni was not comfortable travelling from his home in Plettenberg Bay to Cape Town for court proceedings because he suffers from chronic asthma and is overweight, conditions that put him at a heightened risk of experiencing severe symptoms if he contracted COVID–19,” the court documents state.
The resumption of Spagni’s trial was set for 8–9 October 2020.
However, on 7 October, Spagni’s lawyer appeared in court to provide additional medical proof and state that Spagni would not appear the next day.
Court was recessed until 4 November 2020 to allow Spagni to provide a doctor’s report of his health risks.
Spagni’s counsel then informed the court that he had been unable to travel to see a specialist for additional medical documentation because of the Covid–19 pandemic.
The parties agreed to delay the proceedings until 24 March 2021 and 19 April 2021 for trial, with Spagni present.
On 21 March, Spagni and his wife travelled from South Africa to Bermuda, where they quarantined before entering the United States on 19 April.
Spagni and his wife settled in New York, where they established two residences in his name.
When the court convened 24 March, Spagni was not present, and his lawyer stated that he had given Spagni notice of the trial date and that he had no knowledge of Spagni’s whereabouts and was unable to contact him.
The South African Police Service tried to locate Spagni but were unsuccessful — he had already left the country.
Spagni maintains that he thought the court date was merely a status conference.
Detained pending extradition proceedings
However, the US judge said he found Spagni’s explanation lacking.
He noted that Spagni himself said he chose not to fly from Bermuda back to South Africa for his next court date on 19 April because he didn’t want to risk catching Covid–19 and jeopardising his emigration plans to the US.
When the court convened without Spagni present on 19 April, his counsel again stated that he did not know where his client was, and he moved to withdraw as Spagni’s attorney.
The Magistrate Court of the District of Cape Town issued a warrant for Spagni’s arrest.
Court documents show that the District Court for the Middle District of Tennessee issued a warrant for Spagni’s arrest on 20 July 2021.
Law enforcement arrested Spagni that same day while he was on his way to a digital currency conference.
In their application to have Spagni held without bail, US law enforcement argued he was a flight risk.
“Spagni is believed to have significant cryptocurrency assets that would enable him to flee,” court documents stated.
They also added that Spagni reportedly has a watch valued at $800,000 (R12 million).
Spagni’s extradition hearing was set for 17 September 2021 when he was arrested.