Disgraced FTX founder Sam Bankman-Fried arrested in the Bahamas at US request
US attorney’s office in NY announces arrest of failed crypto exchange’s former CEO, a day before his scheduled testimony to House panel
NEW YORK — The former CEO of failed cryptocurrency firm FTX, Sam Bankman-Fried, has been arrested in the Bahamas at the request of the US government, the US and Bahamian authorities said Monday.
Bankman-Fried had been under criminal investigation by US and Bahamian authorities following the collapse last month of FTX. The firm filed for bankruptcy last month, when it ran out of money after the cryptocurrency equivalent of a bank run.
“Earlier this evening, Bahamian authorities arrested Samuel Bankman-Fried at the request of the US Government, based on a sealed indictment filed by the United States Attorney’s Office for the Southern District of New York,” US Attorney Damian Williams said in a statement. “We expect to move to unseal the indictment in the morning and will have more to say at that time.”
Bankman-Fried’s arrest comes just a day before he was due to testify in front of the House Financial Services Committee, along with the company’s current CEO, John Ray III.
The 30-year-old had in recent weeks defied legal advice and multiplied media appearances offering his version of his company’s sudden failure, usually by video link from the Bahamas where his company is headquartered.
Bahamian Attorney General Ryan Pinder said the Bahamas would “promptly” extradite Bankman-Fried to the US once the indictment is unsealed and US authorities make a formal request. Meanwhile Bahamian authorities plan to continue their own investigation into Bankman-Fried.
“The Bahamas and the United States have a shared interest in holding accountable all individuals associated with FTX who may have betrayed the public trust and broken the law,” said Bahamian Prime Minister Phillip Davis, in a statement.
Bankman-Fried said recently that he did not “knowingly” misuse customers’ funds, and said he believes his millions of angry customers will eventually be made whole.
As much as anyone, Bankman-Fried had embodied the apparent emergence of cryptocurrency as an above-board investment and no longer a frowned on get-rich-quick scheme shunned by the banking establishment.
But after reaching a valuation of $32 billion, FTX’s implosion was swift following a November 2 report on ties between FTX and Alameda, a trading company also controlled by Bankman-Fried.
The report exposed that Alameda’s balance sheet was heavily built on the FTT currency — a token created by FTX and with no independent value.
The price of FTT plunged in early November, roiling both Alameda and FTX, where Alameda had large trading positions.
Reeling from customer withdrawals and short some $8 billion, FTX and some 100 related entities filed for bankruptcy protection on November 11, inviting scrutiny from regulators, prosecutors and furious clients who had believed the hype about cryptocurrency.
Among the revelations, FTX is suspected of fraud for propping up Alameda with billions of dollars in customer funds that are now likely lost forever.
Questions also linger over whether Bankman-Fried engaged in market manipulation, or illegally provided inside information to Alameda.
