Sam Bankman-Fried, the disgraced former CEO and founder of collapsed cryptocurrency exchange FTX, has been arrested at his home in the Bahamas after US prosecutors filed criminal charges.
"Earlier this evening, Bahamian authorities arrested Bankman-Fried at the request of the US Government, based on a sealed indictment filed by the SDNY [Southern District of New York]," Attorney Damian Williams tweeted on Monday evening. Williams added that the indictment will be unsealed later on Tuesday morning.
USA Damian Williams: Earlier this evening, Bahamian authorities arrested Samuel Bankman-Fried at the request of the U.S. Government, based on a sealed indictment filed by the SDNY. We expect to move to unseal the indictment in the morning and will have more to say at that time.
— US Attorney SDNY (@SDNYnews) December 12, 2022
In a statement, the Royal Bahamas Police Force confirmed that Bankman-Fried was arrested shortly after 18:00 on Monday on charges relating to "various Financial Offences against laws of the United States, which are also offences against laws of the Commonwealth of the Bahamas".
A Statement from the Royal Bahamas Police Force on the arrest of Samual Benjamin Bankman-Fried.
Police wish to inform that 30-year-old SAMUEL BENJAMIN BANKMAN-FRIED of California, U.S.A, has been arrested. pic.twitter.com/Mr85S2fzcN — Latrae L. Rahming (DOC)🇧🇸 (@latraelrahming) December 13, 2022
Reuters has confirmed that separate charges were approved against Bankman-Fried by the US Securities and Exchange Commission "relating to violations of securities laws". The New York Times noted that "a person with knowledge of the matter" has confirmed that the charges against Bankman-Fried also include wire fraud, wire fraud conspiracy, and money laundering.
Bankman-Fried is strongly expected to be extradited to the US to face charges in the coming weeks.
An unwitting fraudster?
FTX, which just weeks ago was a crypto behemoth worth $32bn, filed for bankruptcy on 11 November after traders worried about the platform's solvency attempted to withdraw $6bn over just three days. There are strong suspicions that Bankman-Fried knowingly used FTX customers' funds to prop up a formally separate trading firm Alameda Research, which ended up incurring billions of dollars in losses.
Bankman-Fried's arrest comes just hours before he was scheduled to testify before the US House Financial Services Committee about his role in FTX's sudden collapse. In a statement, Committee chair Maxine Waters issued a thinly-veiled criticism of the timing of the arrest as it "denies the public the opportunity" to "hear directly from Mr Bankman-Fried about the actions that have harmed over one million people and wiped out the hard-earned life savings of so many".
Current FTX CEO John Ray, an experienced insolvency professional and lawyer, was also scheduled to testify before the House Financial Services Committee on Tuesday. In his prepared testimony, Ray claimed that "never in my career have I seen such an utter failure of corporate controls at every level of an organization".
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He added: "FTX Group's collapse appears to stem from the absolute concentration of control in the hands of a very small group of grossly inexperienced and unsophisticated individuals who failed to implement virtually any of the systems or controls that are necessary for a company entrusted with other people’s money or assets."
In a recent interview with the BBC, Bankman-Fried denied that he "knowingly" committed fraud: "I didn't knowingly commit fraud, I don't think I committed fraud, I didn't want any of this to happen."
