FTX Founder Sam Bankman-Fried Arrested In Bahamas

Bahamian authorities have arrested Sam Bankman-Fried at the request of US prosecutors, based on a sealed indictment.

The 30 year old founder and former CEO of FTX is scheduled to appear on Tuesday in a magistrates’ court in the Caribbean country’s capital, Nassau. The Bahamas attorney general’s office added that it expects he will be extradited to the United States.

The arrest on Monday of Bankman-Fried comes a day before he was due to testify before the US Congress about the spectacular collapse last month of one of the world’s largest cryptocurrency exchanges, after traders sought to withdraw $6 billion from the platform in just 72 hours.

FTX collapse

Since then, it has emerged Bankman-Fried allegedly used $10 billion in customer funds to prop up his trading business.

The collapse of FTX is already under ‘active’ investigation in Bahamas where it is headquartered, and has resulted in regulators seizing nearly a half-billion dollars in assets from the firm.

According to a court filing last month, FTX owes its 50 biggest creditors some $3.1 billion (£2.6bn), with two creditors owed more than $200m each.

New FTX CEO John Ray lambasted the previous management of FTX, saying “never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here.”

The US Department of Justice earlier this month called for an ‘independent investigation’ into FTX, after it filed for bankruptcy in November after a possible merger with rival crypto exchange Binance failed to materialise.

US charges

Now on Tuesday the US Attorney’s office in Manhattan said in a tweet that SDNY [Southern District of New York] will shortly unseal its charges against Sam Bankman-Fried.

The arrest of the 30-year-old entrepreneur who rode a boom in bitcoin and other digital assets to become a billionaire with a $20bn fortune until FTX’s rapid demise, has been due to appear before the US Congress, where Reuters reported he was prepared to lash out at his former lawyers at Sullivan and Cromwell, new FTX CEO John Ray, and rival exchange operator Binance at a Congressional hearing.

In the testimony, a draft copy of which was seen by Reuters, Bankman-Fried planned to say he was pressured by Sullivan and Cromwell lawyers to nominate Ray as CEO following the sudden exodus of customer funds.

Within minutes he changed his mind, following an offer of billions of dollars of fresh funding, but he was told it was too late.

Bankman-Fried will now be unable to testify before Congress, but Ray’s testimony will go ahead.