Sam Bankman-Fried, the founder of FTX, was arrested in the Bahamas

New York
CNN
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Sam Bankman Fried, Founder FTX crypto exchange failedin the Bahamas on Monday after US prosecutors filed criminal charges against him, according to a statement from the Bahamas government.

Southern District of New York, check Bankman Fried and the collapse of FTX and its sister trading company Alameda, he confirmed his arrest on Twitter.

“Earlier this evening, Samuel Bankman Fried was arrested by Bahamas authorities at the request of the United States Government, pursuant to a sealed indictment filed by SDNY,” wrote US Attorney Damien Williams. “We expect to move to unveil the indictment in the morning and we will have more to say at that time.”

Bankman-Fried, who was arrested without incident at his apartment complex shortly after 6 p.m. EST Monday in Nassau, is scheduled to appear in court Tuesday, the Royal Bahamas Police Force said in a statement.

A representative of Bankman-Fried’s legal team did not immediately respond to CNN’s request for comment.

Shortly after SDNY confirmed his arrest, the Securities and Exchange Commission He said it was authorized Separate charges related to Bankman-Fried’s violations of securities laws, which will be filed publicly on Tuesday.

unclear What are the charges waiting for Bankman Friedthe 30-year-old cryptographer who became an overnight pariah last month as his company suffered a liquidity crunch and Filed bankruptcyleaving at least 1 million depositors unable to access their funds.

The New York Times, citing a person familiar with the matter, mentioned The charges against Bankman-Fried included wire fraud, conspiracy to wire fraud, securities fraud, conspiracy to commit securities fraud, and money laundering.

United State Extradition treaty with the Bahamas US prosecutors are allowed to return defendants to US soil if the charges would carry at least a year in prison in both jurisdictions.

In the four weeks since FTX filed for bankruptcy, Bankman-Fried has sought to portray itself as The CEO is somewhat unlucky who got off his sled, denying accusations that he defrauded FTX customers.

“I haven’t committed any fraud on purpose,” he told the BBC over the weekend. “I didn’t want any of this to happen. I certainly wasn’t nearly as qualified as I thought.”

It was scheduled for Tuesday’s Bankman Fried to appear by default Before the US House Committee on Financial Services, namely ask for answers About how the company collapsed, bouncing around throughout the digital asset ecosystem. Many crypto companies have suspended operations, frozen customer accounts and in some cases filed for bankruptcy due to exposure to FTX.

After his arrest, Representative Maxine Waters, the committee chair, said Bankman-Fried would not testify as scheduled on Tuesday. The hearing is set to move forward, however, starting with testimony from FTX’s new CEO, John J. Ray III, who took over as Bankman-Fried on November 11 and is tasked with shepherding him through the bankruptcy process.

“While I’m disappointed we won’t be able to hear from Mr. Bankman Fried tomorrow, we remain committed to getting to the bottom of what happened,” Waters said. in the current situation Monday night.

So far, Ray has painted a picture of a cryptocurrency empire with virtually no institutional controls and an appalling lack of financial and other record-keeping.

“The scope of the ongoing investigation is enormous,” Wray said in prepared remarks released Monday before his testimony.

Wray said that while the investigation was not completed, the collapse of FTX appeared to result from the concentration of power “in the hands of a very small group of inexperienced and not very experienced individuals” who failed to implement almost any corporate controls.

Ray also states that “client assets from FTX.com were mixed with assets from the Alameda trading platform.” This is a major issue for investigators, as FTX and Alameda were, on paper, two separate entities.

Bankman-Fried denied intentionally mixed funds and sought to distance himself from the day-to-day management of Alameda, which has devised a number of high-risk trading strategies such as arbitrage and “yield farming,” aka investing in digital tokens that pay interest-like rewards, according to the company. Coverage from The Wall Street Journal.

He admitted to mismanaging FTX and not paying enough attention to the risks.

“Look, I screwed up,” he said at the New York Times’ DealBook Summit late last month. “I was the CEO of FTX… I had a responsibility.”

Bankman-Fried also acknowledged the lack of corporate controls and risk management within the businesses he oversaw.

“There was no person primarily responsible for clients’ positional risk on FTX,” Bankman-Fried told DealBook. “And that feels very embarrassing later.”

One of the main questions about the FTX collapse stems from Reuters report Last month, he said Bankman-Fried had created a “backdoor” into FTX’s accounting system, allowing him to modify the company’s financial records without stumbling into accounting flags. The report said Bankman-Fried used this “back door” to transfer $10 billion of FTX clients’ funds to Alameda, the hedge fund, and at least $1 billion is now missing.

Bankman Fried denied knowledge of any such backdoor. “I don’t even know how to program,” Tell Crypto vlogger Tiffany Fong in an interview last month.