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December 13, 2022
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FTX founder Sam Bankman-Fried arrested in Bahamas after U.S. authorities file prison costs

Disgraced FTX founder Sam Bankman-Fried has been arrested within the Bahamas and will probably be extradited to the U.S. to face prison costs stemming from the sudden implosion of his cryptocurrency alternate final month.

Authorities within the Bahamas made the arrest after receiving discover from the U.S. that it had filed costs towards the 30-year-old and possibly would request his extradition, the nation’s authorities mentioned Monday afternoon.

“The Bahamas and the USA have a shared curiosity in holding accountable all people related to FTX who could have betrayed the general public belief and damaged the regulation,” Prime Minister Philip Davis mentioned in an announcement.

The arrest caps off a surprising fall from grace for Bankman-Fried, who was, till very just lately, thought-about the golden boy and white knight of the crypto world. At one level, he was estimated to be value $26 billion; now he claims to have simply $100,000 left.

As chief govt of FTX, Bankman-Fried grew the cryptocurrency alternate he based in 2019 into one of many largest on this planet, with greater than 1 million customers at its peak final yr. He was hailed as a constructive power and reliable spokesperson for the rising trade, particularly as he rescued a number of failing crypto corporations this yr.

However FTX collapsed in spectacular style final month when customers, fearful in regards to the alternate’s solvency, started pulling out their cash en masse. That led to a catastrophic fiasco for FTX, which filed for Chapter 11 chapter safety on Nov. 11. A minimum of $1 billion in buyer funds has disappeared, in response to estimates, and the collapse has triggered a surge in outflows throughout different world crypto exchanges.

In a courtroom submitting submitted a number of days later, its newly put in chief govt, John J. Ray III, a longtime insolvency professional, detailed the disastrous state of economic affairs on the once-heralded firm.

“I’ve been the Chief Restructuring Officer or Chief Government Officer in a number of of the biggest company failures in historical past,” Ray wrote in his declaration. “By no means in my profession have I seen such a whole failure of company controls and such a whole absence of reliable monetary info as occurred right here.”

FTX and Bankman-Fried at the moment are going through investigations within the U.S. and the Bahamas, the place the corporate is predicated, into a spread of doable fraud.

One key inquiry considerations whether or not buyer funds had been lent to buying and selling agency Alameda Analysis, which Bankman-Fried additionally based. Prosecutors are additionally inspecting whether or not tons of of thousands and thousands of {dollars} had been improperly transferred to the Bahamas across the time of FTX’s chapter submitting.

The arrest was made primarily based on a sealed indictment, mentioned Damian Williams, the U.S. lawyer for the Southern District of New York.

“We anticipate to maneuver to unseal the indictment within the morning and may have extra to say at the moment,” Williams mentioned in an announcement posted on Twitter.

Shortly afterward, the U.S. Securities and Change Fee mentioned it had licensed separate costs towards Bankman-Fried “regarding his violations of securities legal guidelines, to be filed publicly tomorrow.”

Bankman-Fried was scheduled to testify earlier than the Home Monetary Providers Committee on Tuesday. However he declined to look for a listening to with the Senate Banking Committee the day after, prompting lawmakers to sentence his “unprecedented abdication of accountability.”

Congresswoman Maxine Waters (D-Los Angeles), chairwoman of the Home Monetary Providers Committee, mentioned she was “stunned” to listen to of Bankman-Fried’s arrest given his scheduled look the subsequent day.

“Though Mr. Bankman-Fried should be held accountable, the American public deserves to listen to straight from Mr. Bankman-Fried in regards to the actions that’ve harmed over a million individuals, and worn out the hard-earned life financial savings of so many,” Waters mentioned in an announcement. “The timing of this arrest denies the general public this chance.”

Bankman-Fried had been on a media blitz in current weeks, doling out quite a few interviews in an effort to elucidate what occurred at FTX.

Earlier on Monday, throughout an interview on Twitter Areas, he mentioned he was going to testify earlier than the Home remotely, as an alternative of in particular person, on Tuesday as a result of “the paparazzi impact is sort of giant.”

“Are you fearful you may be detained if you happen to stepped foot into the U.S.?” one of many panelists responded.

“I don’t consider I might be,” Bankman-Fried mentioned.

Bloomberg was utilized in compiling this report.

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