Sam Bankman-Fried, former CEO of FTX, speaking at the Binance Blockchain Week, Singapore, 19 January, 2019. Binance
The former CEO of now bankrupt crypto exchange FTX, Sam Bankman-Fried (SBF), has been arrested in the Bahamas at the request of the U.S. government, the Bahamas Attorney General and Minister of Legal Affairs, Ryan Pinder, said in a press statement on 12 December.
According to the announcement, SBF was arrested by the Royal Bahamas Police Force after authorities received notification from the U.S. government that it has filed criminal charges against the former CEO, and is likely to request his extradition. The U.S. Attorney’s Office for the Southern District of New York (SDNY) confirmed in a tweet that it had filed a “sealed indictment” prior to SBF’s arrest, which will be unsealed “in the morning”. Bahamas Prime Minister Philip Davis said in a statement:
“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. While the United States is pursuing criminal charges against SBF individually, the Bahamas will continue its own regulatory and criminal investigations into the collapse of FTX.”
The unexpected arrest came only a day before SBF was scheduled to testify before the U.S. House Financial Services Committee for its hearing on the collapse of his companies. Although his indictment is currently sealed, unnamed sources told The New York Times that the charges against SBF included wire and securities fraud, conspiracy to commit wire and securities fraud, and money laundering.
The U.S. Attorney’s Office for SDNY is not the only one to file charges against the disgraced CEO, with the Securities and Exchange Commission (SEC) revealing on 13 December that it was also preparing to charge the individual for his violations of U.S. securities laws.
FTX — and around 130 companies connected to the exchange — filed for Chapter 11 bankruptcy protection on 11 November after it experienced a liquidity crisis caused by the revelation that a large portion of Alameda Research’s assets were tied up in FTT, a token issued by the FTX exchange.
The company’s bankruptcy filings later revealed that the exchange could have more than 1 million creditors, and that it owed its top 50 creditors over $3 billion. Since then, SBF has continued to claim he was unaware of what was happening in his own companies, and that he had not committed any crimes knowingly. Shortly before his arrest, unnamed sources revealed that SBF was under investigation by the Department of Justice (DoJ) for improperly transferring funds out of the U.S. shortly before the exchange filed for bankruptcy.