Former FTX CEO Bankman-Fried arrested
Sam Bankman-Fried, who founded and led FTX until a liquidity crunch forced the cryptocurrency exchange to declare bankruptcy, has been arrested in The Bahamas after being criminally charged by US prosecutors.
The attorney general’s office for The Bahamas said on Tuesday (Australian time) it proceeded with the arrest after receiving formal confirmation of charges against Mr Bankman-Fried, adding that it expected he would be extradited to the US.
A spokesman for the US Attorney’s office in Manhattan confirmed Mr Bankman-Fried had been arrested in the Bahamas but declined to comment on what the charges were.
“Earlier this evening, Bahamian authorities arrested Samuel Bankman-Fried at the request of the US Government, based on a sealed indictment filed by the United States Attorney’s Office for the Southern District of New York,” US prosecutor Damian Williams said in a statement.
“We expect to move to unseal the indictment in the morning and will have more to say at that time.”
Mark Cohen, a lawyer for Mr Bankman-Fried, did not immediately respond to a request for comment.
FTX, which had been among the world’s largest cryptocurrency exchanges, filed for bankruptcy protection on November 11 in one of the highest-profile crypto blow ups after traders pulled $US6 billion ($8.9 billion) from the platform in three days and rival exchange Binance abandoned a rescue deal.
The liquidity crunch came after Mr Bankman-Fried secretly moved $US10 billion ($15 billion) of FTX customer funds to Alameda, Reuters reported, citing two people familiar with the matter.
At least $US1 billion ($1.5 billion) in customer funds had vanished, the people said.
Mr Bankman-Fried told Reuters the company did not “secretly transfer” but rather misread its “confusing internal labeling”.
Asked about the missing funds, he responded: “???”
In a series of interviews and public appearances in late November and December, Mr Bankman-Fried acknowledged risk management failures but sought to distance himself from accusations of fraud, saying he never knowingly commingled customer funds on FTX with funds at his proprietary trading firm, Alameda Research.
“I didn’t ever try to commit fraud,” Mr Bankman-Fried said in a November 30 interview at the New York Times‘ Dealbook Summit, adding he didn’t personally think he had any criminal liability.
Mr Bankman-Fried resigned as FTX’s chief executive the same day as the bankruptcy filing.
In mid-November, the US Attorney’s Office in Manhattan, led by Mr Williams – a veteran securities fraud prosecutor – began investigating how FTX handled customer funds, a source with knowledge of the probe told Reuters.
The Securities and Exchange Commission and Commodity Futures Trading Commission also opened probes.
US crypto investors also sued Mr Bankman-Fried, alleging he and a slew of celebrities who promoted FTX engaged in deceptive practices, leaving the investors with $US11 billion ($16 billion) in damages.
FTX’s demise marked the latest turmoil for the cryptocurrency industry this year.
The overall crypto market has slumped amid a string of meltdowns that have taken down other key players including Voyager Digital and Celsius Network.
