Former CEO of failed cryptocurrency firm FTX, Sam Bankman-Fried, has been arrested in the Bahamas at the request of the US government, US and Bahamian authorities said Monday.
The arrest was made Monday after the US filed criminal charges that are expected to be unsealed Tuesday, according to US Attorney Damian Williams. Bankman-Fried had been under criminal investigation by US and Bahamian authorities following the collapse of FTX last month. The company filed for bankruptcy on November 11, when it ran out of money after the cryptocurrency equivalent of a bank run.
"We hope to move to unseal the allegation in the morning and we'll have more to say at that time," Williams said.
Bahamian Attorney General Ryan Pinder said the Bahamas would "promptly" extradite Bankman-Fried to the US once the indictment was unsealed and US authorities made a formal request. FTX is based in the Bahamas, and since its bankruptcy, Bankman-Fried has remained at its luxury Bahamian resort in Nassau.
A Bankman-Fried spokesman had no comment Monday night.
Bankman-Fried's arrest comes just a day before she was scheduled to 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 FTX clients could 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. She was a prominent figure in Washington, donating 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.
All of that was quickly unraveled last month, when reports cast doubt on the strength of FTX's balance sheet. Clients moved to withdraw billions of dollars, but FTX was unable to meet all the requests because it apparently used client deposits to cover bad bets on Bankman-Fried's investment arm, Alameda Research.
Bankman-Fried recently said it did not "knowingly" misuse client funds, saying it believes its millions of angry customers will eventually recover.
The House Financial Services Committee will still hear testimony from the current chief executive, John Ray III, on Tuesday. Ray, who took over FTX on November 11 and is a longtime restructuring specialist, said in court documents that financial conditions at FTX were worse than at Enron.
Bahamian authorities plan to continue their own investigation into Bankman-Fried.
โThe 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 violated the law,โ Bahamian Prime Minister Phillip Davis said in a statement.
-- The Associated Press
