Former CEO of failed cryptocurrency company FTX, Sam Bankman-Fried, has been arrested in the Bahamas at the request of the US government, US and Bahamian authorities said on Monday.
The arrest came Monday after the US filed a criminal complaint that US Attorney Damian Williams said is due to be unsealed on Tuesday. Bankman-Fried was under criminal investigation by US and Bahamian authorities after the collapse last month FTX. The company filed for bankruptcy on November 11, after which it ran out of money cryptocurrency Equivalent to a bank run.
“We expect to unseal the indictment tomorrow morning and have more to say at that point,” Williams said.
Bahamas Attorney General Ryan Pinder said the Bahamas would extradite “promptly.” Bankmann-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 mostly stayed at its luxury Bahamian complex in Nassau since the company’s failure.
A spokesman for Bankman-Fried did not comment Monday night. Bankman-Fried has the right to appeal his extradition, which could delay, but probably not stop, his extradition to the US.
Bankman-Fried’s arrest comes just a day before his scheduled arrest testify before the House Financial Services Committee. Rep. Maxine Waters, D-Calif., chair of the committee, said she was “disappointed” that the American public and clients of FTX would not see Bankman-Fried testify under oath.
Bankman-Fried was one of the richest people in the world on paper with an estimated net worth of $32 billion. He was a prominent figure in Washington and donated millions of dollars to mostly left-leaning political causes and Democratic political campaigns. FTX grew to become the second largest cryptocurrency exchange in the world.
That all quickly unraveled last month as reports questioned the strength of FTX’s balance sheet. Clients wanted to withdraw billions of dollars, but FTX couldn’t fulfill all requests because it appears to have used its clients’ deposits to cover bad bets at Alameda Research, Bankman-Fried’s investment arm.
Bankman-Fried recently said he had not “knowingly” misappropriated his customers’ funds and said he believed his millions of disgruntled customers would eventually recover.
The House Financial Services Committee is due to hear testimony from current CEO John Ray III on Tuesday. Ray, who acquired FTX on Nov. 11 and is a longtime restructuring specialist, said in court filings that FTX’s financial conditions are worse than Enron’s.
The Bahamian authorities plan to continue their own investigation into Bankman-Fried.
“The Bahamas and the United States have a common interest in holding accountable all individuals associated with FTX who may have betrayed public trust and broken the law,” Bahamian Prime Minister Philip Davis said in a statement.
