The former CEO of failed cryptocurrency firm FTX, Sam Bankman-Fried, has been arrested in the Bahamas at the request of the US government, US and Bahamian authorities said Monday.
The arrest was made Monday after the US
filed criminal charges that are expected to be unsealed Tuesday, according to
US Attorney Damian Williams. Bankman-Fried had been under criminal
investigation by US and Bahamian authorities following the collapse last month
of FTX. The firm filed for bankruptcy on November 11, when it ran out of money
after the cryptocurrency equivalent of a bank run.
“We expect to move to unseal the indictment
in the morning and will have more to say at that time,” Williams said.
Bahamian Attorney General Ryan Pinder said
the Bahamas would “promptly” extradite Bankman-Fried to the US once the
indictment is unsealed and US authorities make a formal request. FTX is
headquartered in the Bahamas and Bankman-Fried has largely remained in his
Bahamian luxury compound in Nassau since the company's failure.
A spokesman for Bankman-Fried had no
comment Monday evening. Bankman-Fried has a right to contest his extradition,
which could delay but not likely stop his transfer to the US.
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.
That all unraveled quickly last month, when
reports called into question the strength of FTX's balance sheet. Customers
moved to withdraw billions of dollars, but 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 made whole.
The House Financial Services Committee will
still hear testimony Tuesday from current CEO, John Ray III. Ray, who took over
FTX on November 11 and is a long-time restructuring specialist, 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,” said Bahamian Prime
Minister Philip Davis, in a statement.