Sam Bankman-Fried, the founder and former CEO of the cryptocurrency exchange FTX, was arrested in the Bahamas, just over a month after the business declared bankruptcy. Ryan Pinder, the Attorney General of the Bahamas announced the arrest of Bankman-Fried on Monday.
According to a statement from the Bahamas Police, Bankman-Fried was arrested at his apartment complex in Albany, Nassau, The Bahamas, soon after 6:00 pm Monday.
The arrest was after the US government reportedly informed the Bahamas of the criminal charges brought against Bankman-Fried and stated that it would probably ask for his extradition from the country where he was living and where FTX had its operational headquarters. The arrest was confirmed by Damian Williams, the US Attorney for the Southern District of New York.
The arrest represents a remarkable fall from the glory that comes after the 30-year-old businessman capitalized on the cryptocurrency boom to build one of the biggest cryptocurrency exchanges in the world and acquired a net worth of $26.5 billion.
The exchange, which was established in 2019 and is based in the Bahamas, filed for bankruptcy on November 11 as investors rushed to withdraw $6 billion from the platform in just 72 hours, making it difficult to raise money to prevent it from bankruptcy.
Following FTX’s collapse, it was revealed that Bankman-FRied and his associates may have used FTX customer deposits to support his other company, the trading house Alameda Research. When a run on FTX revealed the exchange lacked the money to refund customers, it quickly declared bankruptcy.
In the past few weeks, Bankman-Fried has been on a seemingly nonstop media tour of interviews to explain what occurred inside a company that, for a time, made him one of the youngest billionaires in the world. He was scheduled to testify in a congressional hearing this week.
In a statement, Bahamas Prime Minister Philip Davis noted that the United States and the Bahamas have a common interest in holding accountable all FTX associates who may have betrayed the public trust and broken the law.
The Bahamas will continue its own regulatory and criminal investigations into the FTX collapse, with the continued assistance of its law enforcement and regulatory partners in the United States and elsewhere, while the United States is pursuing its criminal charges against Bankman-Fried on an individual basis.
Meanwhile, charges related to Bankman-Fried’s violation of security laws have been authorized by the US Securities and Exchange Commission and will be made public tomorrow.
Attorneys for FTX and Bahamian authorities had been fighting fierce wars in court and the court of public opinion. On Monday, FTX lawyers claimed that Bankman-Fried and the Bahamian government were conspiring to steal assets from the company and place them in cryptocurrency wallets under the supervision of Bahamian officials.
The Bahamas and the US will likely work closely together throughout the bankruptcy processes, as seen by Bankman-Fried’s arrest by Bahamas law authorities and his expected extradition.
Since the early 20th century, when the Bahamas were still under British rule, the United States and the Bahamas have been parties to an extradition pact.
According to the current treaty, which was signed in 1990, the seeking party must present an arrest order that has been issued by a judge or other competent authority.
Since FTX filed for bankruptcy on November 11, Bankman-Fried has depicted his role in the fall of the cryptocurrency exchange as poor management or negligence in public statements.
John J. Ray III, who had overseen Enron’s bankruptcy, took over the position of CEO in FTX. This week, Ray will also appear before congress to give a testimony in prepared remarks made public on Monday.
Ray claimed that FTX engaged in a spending binge from the end of 2021 to the beginning of 2022 during which $5 billion was sent on a variety of investments and businesses, many of which may only be worth of small portion of what was paid for them, and the company made more than $1 billion in loans and other payments to insiders.
Additionally, Ray confirmed media accusations that funds from FTX customers were mixed with assets from Alameda Research.