Disgraced FTX founder Sam Bankman-Fred has been arrested in the Bahamas and will be extradited to the United States to face criminal charges stemming from the sudden collapse of the cryptocurrency exchange last month.
Authorities in the Bahamas made the arrest after receiving notice from the United States that they had filed charges against the 30-year-old and may seek his extradition, the country’s government said Monday afternoon.
“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,” Prime Minister Philip Davis said in a statement.
The arrest culminated in a spectacular fall from grace for Bankman-Fried, who was, until very recently, considered the golden boy and white knight of the cryptocurrency world. At one point his fortune was estimated at $26 billion; Now he claims he only has $100,000 left.
As CEO of FTX, Bankman-Fried has grown the cryptocurrency exchange he founded in 2019 into one of the largest in the world, with a peak of more than 1 million users last year. He has been hailed as a positive force and a trustworthy spokesperson for the nascent industry, especially since he has bailed out several failed crypto companies this year.
But FTX collapsed in spectacular fashion last month when users, concerned about the solvency of the stock exchange, began withdrawing their funds en masse. This led to a catastrophic fiasco for FTX, which filed for Chapter 11 bankruptcy protection on November 11. At least $1 billion of customer funds have disappeared, according to estimates, and the crash has fueled outflows across other global cryptocurrency exchanges.
In a court filing filed a few days later, its new CEO, John J. Ray III, a longtime insolvency expert, detailed the disastrous state of finances at the once publicized firm.
Ray wrote in his book a permit. “Never in my professional life have I witnessed such a complete failure of corporate controls and such complete absence of trustworthy financial information as here.”
FTX and Bankman-Fried are now facing investigations in the United States and the Bahamas, where the company is headquartered, into a range of possible fraud.
One of the main inquiries concerned whether customer funds were loaned to the Alameda Research business, which Bankman-Fried also founded. Prosecutors are also examining whether hundreds of millions of dollars were improperly diverted to the Bahamas around the time FTX filed for bankruptcy.
Damien Williams, US Attorney for the Southern District of New York, said the arrest was based on a sealed indictment.
“We expect to move to release the indictment in the morning and will have more to say at that time,” Williams said in a statement posted on Twitter.
Shortly thereafter, the SEC said it authorized separate charges to be brought against Bankman-Fried “related to his violations of securities laws, to be filed publicly tomorrow.”
Bankman-Fried was scheduled to testify before the House Financial Services Committee on Tuesday. But he refused to appear for a hearing before the Senate Banking Committee the next day, prompting lawmakers to condemn his “unprecedented waiver of impeachment.”
Congresswoman Maxine Waters (D-LA), chair of the House Financial Services Committee, said she was “surprised” to hear of Bankman-Fried’s arrest given his scheduled appearance the next day.
“Although Mr. Bankman Fried must be held accountable, the American public deserves to hear directly from Mr. Bankman Fried about the actions that harmed more than a million people, and wiped out their hard-earned life savings,” Waters said in a statement. The timing of this arrest The public is deprived of this opportunity.
Bankman-Fried has been on a media blitz in recent weeks, giving numerous interviews trying to explain what happened at FTX.
Earlier on Monday, during interview On Twitter Spaces, he said he will testify before the House of Representatives remotely, instead of testifying on Tuesday because “the influence of the paparazzi is too great.”
“Are you worried that you might be arrested if you enter the United States?” One of the committee members replied.
“I don’t think I would be,” said Bankman-Fred.
Bloomberg was used to compile this report.