Former FTX CEO Bankman-Fried Arrested in Bahamas After United States of America Files Charges

Former FTX CEO Bankman-Fried Arrested in Bahamas After United States of America Files Charges

Sam Bankman-Fried, the founder of FTX, was arrested in the Bahamas on Monday, December 12, at the request of US prosecutors, the day before he was scheduled to testify before Congress about the sudden failure of one of the world’s largest cryptocurrency exchanges last month.

The arrest is a stunning setback for the 30-year-old entrepreneur, who became a billionaire with the FTX bitcoin and other digital assets before the company’s rapid demise.

The arrest came as Bankman-Fried is ready to criticize 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. And when within minutes he changed his mind, following an offer of billions of dollars of fresh funding, he was told it was too late.

Bankman-Fried was arrested shortly after 6:00 pm Monday (2300 GMT) at his apartment complex, and will appear in a magistrate court on Tuesday, Bahamian police said. The Bahamas attorney general’s office said it expects he will be extradited to the United States.

U.S. prosecutors said they had a sealed indictment against Bankman-Fried and charges would be revealed on Tuesday. The New York Times reported he faces fraud and money laundering charges. The U.S. Securities and Exchange Commission separately authorized charges relating to Bankman-Fried’s violations of securities laws, the regulator said on Monday.

FTX’s fall from grace sent shockwaves through an already damaged cryptocurrency industry, which has seen a string of meltdowns this year that have taken down other key players including Voyager Digital and Celsius Network.

Bankman-Fried, who had become a prominent and unconventional figure  during crypto’s boom, said the fortunes of FTX and his trading firm Alameda declined rapidly this year as crypto currencies crashed amid rising interest rates.

In late 2021, he said Alameda had net asset value of more than $50 billion and manageable levels of debt. That became unsustainable as digital assets declined.

“Last year, my net worth was valued at $20b,” Bankman-Fried wrote. “Last I saw, I believe my bank account had about $100k in it.”

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