Cryptocurrency Scam: Former FTX CEO Sam Bankman-Fried Arrested in the Bahamas
Sam Bankman-Fried, who founded and led FTX until a liquidity crunch forced the cryptocurrency exchange to declare bankruptcy last month. Image Courtesy: Twitter/@EmmaRincon
New York:The former CEO of failed cryptocurrency firm FTX, Sam Bankman-Fried, was arrested on Monday in the Bahamas at the request of the US government, US and Bahamian authorities.
Bankman-Fried had been under criminal investigation by the two countries following the collapse last month of FTX. The firm filed for bankruptcy on November 11, 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 Monday. He said he expected the indictment would be unsealed on Tuesday.
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.
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," Bahamian Prime Minister Phillip Davis said in a statement.
FTX was headquartered in the Bahamas, and since its failure Bankman-Fried has remained in his luxury compound in Nassau.
Separately, the Securities and Exchange Commission said it also plans to file charges Tuesday against Bankman-Fried for violating US securities law.
Bankman-Fried, who was one of the world's wealthiest people on paper, went from king of cryptocurrencies to his arrest in a month. FTX was the second-largest cryptocurrency exchange in the world before it went bankrupt, but the exchange intermingled customer deposits with its investment arm, Alameda Research.
Before its failure, Bankman-Fried was a prominent personality in Washington, donating millions of dollars toward mostly left-leaning political causes and Democratic political campaigns.
Ray, the new CEO of FTX in bankruptcy and a long-time restructuring specialist, has said in court filings that the financial conditions at FTX were worse than at Enron.
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.
A spokesman for Bankman-Fried had no comment Monday evening.
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