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Sam Bankman-Fried, the former Chief executive of the defunct cryptocurrency company FTX, was detained in the Bahamas at the behest of the American government, according to U.S. and Bahamian authorities on Monday.
According to U.S. Attorney Damian Williams, the arrest took place on Monday after the US filed criminal charges that will likely be made public on Tuesday. Following FTX’s demise last month, Bankman-Fried had been the subject of a criminal probe by American and Bahamian authorities. When the company ran out of capital following the cryptocurrency equivalents of a run on the banks, it filed for bankruptcy on November 11.
The Bahamas would “swiftly” extradite Bankman-Fried to the United States after the charge is made public and American authorities formally request it, according to Attorney General of the Bahamas Ryan Pinder. Bankman-Fried has primarily resided in his opulent Bahamas estate in Nassau since the collapse of the company, which has its headquarters there.
Fried’s spokeswoman was unavailable for comment Monday night. The transfer of Bankman to the United States could be delayed, but not likely prevented, if he chooses to challenge his extradition.
Just one day prior to his scheduled appearance before the House Financial Services Committee, Bankman-Fried was arrested. The committee’s chairwoman, Rep. Maxine Waters, D-Calif., expressed frustration that Bankman-Fried wouldn’t be able to speak in front of the American people and FTX’s clients.
On paper, Bankman-Fried was among the richest persons in the world; his net worth was estimated was $32 billion. He was a well-known figure in Washington who gave millions of dollars to Democratic election races and generally left-leaning political causes. The second-largest cryptocurrency exchange in the world is now FTX.
Last month, when reports questioned the stability of FTX’s balance sheet, everything came crashing down. Customers requested billions of dollars in withdrawals, but FTX was unable to accommodate them all because it reportedly used deposit accounts to offset losing wagers at Bankman-investment Fried’s subsidiary, Alameda Research.
Bankman-Fried lately claimed that he did not “willfully” misuse his customers’ money and that he is certain that his millions of irate clients would soon receive their money back.
John Ray III, the new Ceo, is still scheduled to testify before the House Financial Services Committee on Tuesday. The financial situation at FTX was worse than at Enron, according to Ray, the new CEO of FTX who has extensive experience in restructuring.
Regulators in the Bahamas want to carry out their own inquiry into Bankman-Fried.
Additional charges relating to alleged offences of securities laws have been authorised, according to the U.S. Securities and Exchange Commission, and will be filed openly on Tuesday.
