Sam Bankman-Fried, the founder of the collapsed cryptocurrency exchange FTX, was arrested in the Bahamas on Monday, according to a government statement, after US authorities filed criminal charges against him.
The Southern District of New York, which is investigating Bankman-Fried and the collapse of FTX and its twin trading company Alameda, announced his arrest on Twitter.
Samuel Bankman-Fried was arrested by Bahamian officials earlier this evening at the request of the United States government, according to US lawyer Damien Williams and a secret complaint filed by the SDNY. “We expect to move to unseal the indictment in the morning and will have more to say at that time.”
According to a statement released by the Royal Bahamas Police Force, Bankman-Fried was apprehended without incident at his apartment complex in Nassau shortly after 6 p.m. ET on Monday and is expected to appear in court on Tuesday.
CNN called a member of Bankman-legal Fried’s team, but they did not respond quickly.
Shortly after the SDNY confirmed Bankman’s incarceration, the Securities and Exchange Commission announced it had authorized separate charges related to Bankman – “violations Fried’s of securities laws” On Tuesday, these charges will be made public.
Unknown allegations are pending against the 30-year-old crypto-celebrity Bankman-Fried, whose company had a liquidity crisis and filed for bankruptcy last month, leaving at least one million depositors unable to access their funds.
The New York Times, citing a source familiar with the issue, reported that Bankman-Fried was charged with money laundering, securities fraud, wire fraud, and conspiracy to commit wire fraud.
According to the extradition agreement between the United States and the Bahamas, defendants whose offenses entail a least one-year term in both countries may be returned to the United States.
In the four weeks since FTX’s bankruptcy filing, Bankman-Fried has worked to dispel allegations that he misled FTX’s clients by portraying himself as an unlucky CEO who missed his target.
“I didn’t knowingly commit fraud,” he told the BBC over the weekend. “I didn’t want any of this to happen. I was certainly not nearly as competent as I thought I was.”
On Tuesday, Bankman-Fried is expected to appear digitally before the US House Financial Services Committee, which is asking for explanations for how the company failed and resonated throughout the digital asset market. Several cryptocurrency firms have ceased operations, frozen customer accounts, and in some cases filed for bankruptcy due to their exposure to FTX.
After his detention, committee chairwoman Rep. Maxine Waters said that Bankman-Fried will no longer testify before the committee on Tuesday. However, the conference was slated, to begin with testimony from John J. Ray III, the new CEO of FTX, who succeeded Bankman-Fried on November 11 and is responsible for navigating the firm through the bankruptcy process.
“While I am disappointed that we will not be able to hear from Mr. Bankman-Fried tomorrow, we remain committed to getting to the bottom of what happened,” as stated by Waters in a statement issued on Monday evening.
Ray has so far revealed a crypto enterprise with virtually no corporate controls and astonishingly inadequate financial and other record-keeping.
In prepared statements released on Monday before his hearing, Ray described the extent of the present inquiry as “enormous.”
Even though the inquiry is ongoing, Ray believes that FTX’s demise was caused by the concentration of power “in the hands of a very small group of extremely stupid and naive individuals” who failed to implement minimal corporate controls.
Additionally, Ray says as the fact that “customer assets from FTX.com were commingled with assets from the Alameda trading platform.” Based on the information of the investigators, FTX and Alameda were separate legal businesses.
Denies from SBF
According to The Wall Street Journal, Bankman-Fried has denied knowingly combining funds and has made an effort to remove himself from the daily management of Alameda, which engaged in high-risk trading practices such as arbitrage and “yield farming,” or investing in digital tokens that offer similar returns to interest rates.
“Look, I screwed up,” he said at the New York Times’ DealBook Summit late last month. “I was CEO of FTX…I had a responsibility.”
He addressed his mistake during the DealBook Summit presented by the New York Times late last month. I managed FTX as CEO. I had an obligation to carry out.
Additionally, Bankman-Fried acknowledged that the companies he managed lacked corporate governance and risk management.
“There was no person who was chiefly in charge of positional risk of customers on FTX,” Bankman-Fried told DealBook. “And that feels pretty embarrassing in retrospect.”
Bankman-Fried allegedly inserted a “backdoor” into FTX’s accounting system last month, allowing him to alter the company’s financial records without triggering any accounting red flags. This is one of the primary questions surrounding the death of FTX. Using this “backdoor,” Bankman-Fried allegedly transferred $10 billion in FTX customer funds to the hedge fund Alameda, of which at least $1 billion is now missing.
Bankman-Fried has denied any knowledge of a similar backdoor. In an interview with bitcoin vlogger Tiffany Fong from last month, he stated, “I don’t even know how to code.”
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