The former CEO of failed cryptocurrency firm FTX, Sam Bankman-Fried, has been arrested in the Bahamas at the request of the U.S. government.
The arrest was made late Monday, December 12, 2022 after the U.S. filed criminal charges that are expected to be unsealed today, December 13, 2022.
Bankman-Fried had been under criminal investigation by U.S. and Bahamian authorities following the collapse of FTX last month. The firm filed for bankruptcy on November 11, 2022.
“We expect to move to unseal the indictment in the morning and will have more to say at that time,” U.S. Attorney Damian Williams noted.
Bahamian Attorney General, Ryan Pinder, announced that the Bahamas would “promptly” extradite Bankman-Fried to the U.S. once the indictment is unsealed and U.S. authorities make a formal request.
FTX is headquartered in the Bahamas and Bankman-Fried has mostly remained in his Bahamian luxury compound in Nassau since the company’s failure.
A spokesman for Bankman-Fried made no comment on Monday evening. Bankman-Fried has a right to contest his extradition, which could delay but not likely stop his transfer to the U.S.
Bankman-Fried’s arrest comes just a day before he was due to testify in front of the House Financial Services Committee.
Rep. Maxine Waters, D-Calif., chairwoman of the committee, said she was “disappointed” that the American public, and FTX’s customers, would not get to see Bankman-Fried testify under oath.
Bankman-Fried was one of the world’s wealthiest people on paper, with an estimated net worth of $32 billion. He was a prominent personality in Washington, donating millions of dollars toward mostly left-leaning political causes and Democratic political campaigns.
FTX grew to become the second-largest cryptocurrency exchange in the world. Things turned sour when reports called into question the strength of FTX’s balance sheet. Customers moved to withdraw billions of dollars.
Unfortunately, FTX could not meet all the requests because it apparently used its customers’ deposits to cover bad bets at Bankman-Fried’s investment arm, Alameda Research.
Bankman-Fried said recently that he did not “knowingly” misuse customers’ funds, and said he believes his millions of angry customers will eventually be compensated.
Lawmakers To Hold FTX Hearing Despite Former CEO’s Arrest
The House Financial Services Committee plans to hold a hearing into the collapse of crypto exchange FTX today, December 13, 2022 even though Former CEO, Sam Bankman-Fried will be missing.
Sam Bankman-Fried was scheduled to testify in front of the House Financial Services Committee, along with the company’s current CEO, John Ray III.
The House Financial Services Committee is still expected to hear a testimony from current CEO, John Ray III.
Ray, a long-time restructuring specialist, who took over FTX on November 11, 2022 has said in court filings that the financial conditions at FTX were worse than at Enron.
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, Philip Davis
The U.S. Securities and Exchange Commission stated that it had authorized separate charges related to alleged violations of securities laws and would file them publicly.
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