Monday evening Bahamian authorities arrested Sam Bankman-Fried, the former CEO of collapse cryptocurrency exchange FTX.
Bankman-Fried had agreed to testify before the US House Financial Services Committee about the circumstances surrounding the collapse of his Bahamian-based cryptocurrency exchange one day later, however due to his arrest, this now appears unlikely.
The Bahamian Office of the Attorney General & Ministry of Legal Affairs said the Royal Bahamas Police detained Bankman-Fried after being notified the United States had formally filed criminal charges against the former crypto-billionaire.
The statement noted Bankman-Fried is being held pursuant to the Bahama’s extradition treaty with the United States. The treaty specifies a subject may be extradited for charges which constitute crimes in both countries.
Damian Williams, U.S. Attorney for the Souther District of New York said in a statement, “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.”
In a statement, Bahamas Prime Minister Philip Davis said, “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.”
He added, “While the United States is pursuing its own criminal charges against SBF individually, The Bahamas will continue its own regulatory and criminal investigations into the FTX collapse, with continued cooperations of its law enforcement and regulatory partners in the United States and elsewhere.”
In addition, the US Securities and Exchange Commission will unseal charges today related to Bankman-Fried’s violations of securities laws, according to an SEC statement.
U.S. House Financial Services Committee Chairwoman Maxine Waters (D-CA) expressed disappointment her committee would not hear from Bankman-Fried, noting, “The public has been waiting eagerly to get these answers under oath before Congress, and the timing of this arrest denies the public this opportunity.”
She added that John Ray III, FTX’s current CEO, will still testify about what he has discovered since taking over the failed company.
Bankman-Fried’s public statements since the collapse of his cryptocurrency exchange have alternately portrayed the collapse as due to mismanagement or negligence, and denied knowledge of improprieties which have been reported to date.
During a Monday interview on Twitter where he was asked about how FTX valued customer collateral positions, he replied, “I don’t have the answer in front of me. I wasn’t involved much in this process.”
CEO John Ray III however has painted a different picture on prepared testimony published ahead of his appearance noting several “unacceptable management practices” he has uncovered since taking over the failed exchange, including the commingling of FTX customer assets with Bankman-Fried’s trading company, Alameda Research.
In FTX’s bankruptcy filing, it was noted the company had an $8 billion hole in its books.
