Ex-CEO of bankrupt cryptocurrency company FTX Sam Bankman-Fried arrested in the Bahamas

The former CEO of bankrupt cryptocurrency firm FTX, Sam Bankman-Fried, has been arrested in the Bahamas at the request of the US government, US and Bahamian authorities announced on Monday.

The arrest was made on Monday after the United States filed criminal charges that are expected to be disclosed on Tuesday, according to U.S. Attorney Damian Williams. Bankman-Fried had been the subject of a criminal investigation by US and Bahamian authorities following the collapse of FTX last month. The company filed for bankruptcy on November 11, when it ran out of money after the cryptocurrency equivalent of a bank run.

“We expect to unseal the indictment in the morning and will have more to say then,” Williams said.

Bahamas Attorney General Ryan Pinder said the Bahamas would “promptly” extradite Bankman-Fried to the United States once the indictment is unsealed and US authorities make a formal request. FTX is headquartered in the Bahamas, and Bankman-Fried has largely remained at its luxury Bahamas resort in Nassau since the venture failed.

A spokesperson for Bankman-Fried had no comment Monday evening. Bankman-Fried has the right to challenge his extradition, which could delay but probably not stop his transfer to the United States

Bankman-Fried’s arrest comes just a day before he is scheduled to testify before the House Financial Services Committee. Rep. Maxine Waters, D-Calif., chair of the committee, said she was “disappointed” that the American public and FTX customers could not see Bankman-Fried testify under oath.

Bankman-Fried was one of the richest people in the world on paper, with an estimated net worth of $32 billion. He was a prominent figure in Washington, donating millions of dollars to mostly left-wing political causes and Democratic political campaigns. FTX has become the second largest cryptocurrency exchange in the world.

All of that quickly came crashing down last month, when reports questioned the strength of FTX’s balance sheet. Customers decided to withdraw billions of dollars, but FTX couldn’t meet all the demands because it apparently used its customers’ deposits to cover bad bets from Bankman-Fried’s investment arm. , AlamedaResearch.

Bankman-Fried recently said he did not “knowingly” misuse client funds and said he believes his millions of angry clients will eventually be cured.

The House Financial Services Committee will hear testimony again on Tuesday from current CEO John Ray III. Ray, who took over FTX on Nov. 11 and is a longtime restructuring specialist, said in court that FTX’s financial terms were worse than Enron’s.

Bahamian authorities plan to continue their own investigation into Bankman-Fried.

“The Bahamas and the United States have a common interest in holding accountable anyone associated with FTX who may have betrayed the public trust and broken the law,” Bahamas Prime Minister Philip Davis said in a statement. .