Sam Bankman Fried, founder of collapsed cryptocurrency exchange FTX, was arrested in the Bahamas on Monday after US prosecutors filed criminal charges.
The Bahamas government said in a statement that “Security Belt’s arrest came after receiving official notification from the United States that it has filed criminal charges against Belt and will likely seek his extradition.”
The arrest was the latest stunning development in one of the most dramatic falls from grace in the company’s recent history. the master. Bankman-Fried, 30, was scheduled to testify in Congress on Tuesday about FTX breakdownwhich was one of the powerhouses in the nascent cryptocurrency industry until it virtually imploded overnight last month after a run on deposits exposed an $8 billion hole in its accounts.
Prosecutors for the Southern District of New York confirmed that Mr. Bankman Fried has been charged and said the indictment will open on Tuesday. On the other hand, the SEC said in a statement that it had authorized charges “related to Mr.” Bankman-Fried Violations of Our Securities Laws.”
criminal charges against mr. A person with knowledge of the matter said that Bankman-Fried involved wire fraud, conspiracy to defraud, securities fraud, conspiracy to defraud securities, and money laundering.
the master. The person said Bankman Fried, who was the only person accused in the indictment, was being taken into custody by Bahamas authorities. He was arrested shortly after 6 p.m. at his apartment complex in the resort town of Albany in the Bahamas, according to a statement from the Bahamas Police. timing of when mr. It was unclear whether Benkman Fried would be transferred to the United States. While the Bahamas has an extradition treaty with the United States, the process can take weeks, sometimes much longer if a criminal defendant objects to it.
the master. Bankman-Fried was cooperative during the arrest, according to a person familiar with the matter, and will be held overnight in a cell at a police station. On Tuesday, he is scheduled to appear in Magistrates Court in Nassau, the capital of the Bahamas.
spokesman for mr. Bankman Fried declined to comment. Nicholas Biasi, a spokesperson for the US Attorney’s Office, also declined to comment.
In the aftermath of the fall of FTX
The sudden crash of the cryptocurrency exchange left the industry stunned.
“Earlier this evening, Bahamas authorities arrested Samuel Bankman Fried at the request of the US government, pursuant to a sealed indictment,” Damien Williams, US Attorney for the Southern District of New York, said in a statement. We expect to move to unveil the indictment in the morning and we’ll have more to say at that time.
Once a golden boy in the cryptocurrency industry and a major donor to the Democratic Party, the master. Bankman Fried It has seen his vast business and political empire crumble at dizzying speed. The exchange filed for bankruptcy last month, and his personal fortune has dwindled to almost nothing. While he used to be hailed as the modern-day John Pierpont Morgan, he is now more often likened to Bernie Madoff, who orchestrated the largest Ponzi scheme in history.
Lawyers involved in the case expressed their surprise at the surprise of the arrest. the master. It was widely expected that Bankman-Fried would face a criminal indictment. But complex white-collar fraud cases can take months to build. Until arrest, mr. Bankman-Fried was scheduled to testify remotely about FTX’s collapse at a hearing before the House Financial Services Committee on Tuesday. The hearing is still about to go ahead, only without mr. Bankman Fried Certificate.
The American public deserves to hear directly from Mr. “The Bank of Man-Fried is concerned about actions that have harmed more than a million people,” Rep. Maxine Waters, who chairs the committee, said in a statement. “The public has been eagerly awaiting these answers under oath to Congress, and the timing of this arrest deprives the public of that opportunity.”
Several people familiar with the investigation said the speed with which authorities moved to file criminal and civil charges was an indication that prosecutors and regulators had tipped off cooperating witnesses.
the master. Since then, Bankman-Fried has been facing scrutiny Dozens of organizers around the world, including the Department of Justice, the Securities and Exchange Commission, and the Commodity Futures Trading Commission. Manhattan prosecutors were examining whether FTX broke the law by funneling billions in client funds to Alameda Research, a cryptocurrency hedge fund that Mr. Bankman-Fried also founded and owns.
They also focused on whether mr. Bankman-Fried and its hedge fund engaged in market manipulation that may have helped cause the failure of two high-profile cryptocurrencies last spring.
Since the collapse of FTX, the Securities and Exchange Commission and federal prosecutors have moved quickly with requests for documents from various parties, including some major financial firms that invested as much as $2 billion in the cryptocurrency exchange beginning last year, two people familiar with the matter said.
It is not clear if federal authorities are looking to charge anyone else in connection with the FTX crash. It is not uncommon for a civil SEC complaint to reveal more information about the events leading up to the filing of the charges than the indictment.
FTX’s meltdown began early last month, when a run on deposits exposed an $8 billion hole in the company’s finances. the master. Bankman-Fried sought a lifeline from rival firm, cryptocurrency exchange giant Binance, but the deal fell through after Binance examined FTX’s books.
the master. Bankman-Fried has quickly become a villain in the cryptocurrency industry. Hundreds of thousands of customers have money trapped in FTX, with little prospect of getting it back anytime soon.
Surprisingly for an executive facing criminal investigations, Mr. Bankman-Fried has given numerous media interviews in the aftermath of the FTX collapse. At a recent DealBook Summit, a New York Times event, he blamed “massive managerial failures” and sloppy accounting for his company’s collapse, insisting he “never attempted to commit fraud” or willfully dip into FTX clients’ funds to fund other investments.
When FTX filed for bankruptcy, Mr. Bankman Fried has resigned as CEO. He was replaced by John Ray, a veteran corporate turnaround expert who oversaw the dissolution of energy trading firm Enron after an accounting scandal in 2001.
In a bankruptcy filing last month, Mr. Ray said FTX’s management reflects “a complete failure of corporate control.”
the master. Wray was also scheduled to testify before the House of Representatives on Tuesday. in Prepared statementHe said that FTX was a mess.
The collapse came from “the utter concentration of control in the hands of a very small group of inexperienced and inexperienced individuals,” he wrote.
