Bahamian authorities arrested FTX founder Sam Bankman-Fried on Monday night after the District Attorney for the Southern District of New York announced an indictment under seal against the Bahamian government. The collapse of the cryptocurrency exchange.
Sam Bankman-Fried Arrested
Before his arrest was announced, Sam Bankman-Fried was hypothetically scheduled to testify before the House Financial Services Committee on Tuesday, but his attorney told CNBC that he would not testify.
Sam Bankman-Fried’s arrest is the first concrete step by regulators to hold individuals responsible for last month’s multibillion-dollar bombing of FTX.
Southern District Attorney Damian Williams of New York tweeted that he expected the federal government ”to file an indictment in the morning.” The New York Times reported that the charges include wire fraud, conspiracy to commit securities fraud, securities fraud, conspiracy to commit securities fraud and money laundering, citing an official familiar with the matter.
Bahamas Attorney General Ryan Pinder said the US would ”likely seek his extradition”. The Royal Bahamas Police Force confirmed his arrest and said he will appear in Nassau Magistrates’ Court on Tuesday.
”The Bahamas and the United States share a common interest in prosecuting anyone associated with FTX who may have violated the law and the public trust,” Bahamas Prime Minister Philip Davis said in a statement.
”While the United States pursues criminal charges against SBF separately, The Bahamas will continue its regulatory and criminal investigation into the FTX collapse, continuing to work with law enforcement and regulatory partners in the United States and elsewhere.” name.
Bahamian regulators and FTX lawyers battled it out in the courts and in the courts of public opinion. On Monday morning, lawyers for FTX accused the Bahamian government of working with Sam Bankman-Fried to remove FTX assets from the company’s control and place them in cryptocurrency wallets controlled by Bahamian regulators.
The arrest and pending extradition of Bankman-Fried by Bahamian law enforcement authorities indicates that close cooperation between the Bahamas and the United States will continue to develop throughout the bankruptcy process. The Bahamas and the United States have had an extradition treaty since the early 20th century, when the Bahamas were still under British control. The current agreement was signed in 1990 and requires the plaintiff to submit an arrest warrant issued by a judge or ”other competent authority.”
In November, FTX and its affiliates filed for bankruptcy, and Bankmans-Fried stepped down as CEO. Cryptocurrency trading firms have boomed after executing assets similar to banking operations.
FTX’s collapse was triggered by CoinDesk’s reports of a highly concentrated position in FTT’s self-issued FTT coin, which Bankman-Fried’s hedge fund Alameda Research used as collateral for its multibillion-dollar cryptocurrency loans. Rival exchange Binance has fueled mass exits by announcing it will sell its FDN shares. The company froze its assets and declared bankruptcy a few days later. Later reports alleged that FTX had commingled client funds with Bankman-Fried’s cryptocurrency hedge fund Alameda Research and lost billions in client deposits in the process.
Sam Bankman-Fried was replaced by John J. Ray III, who oversaw the bankruptcy of Enron. Ray is also scheduled to testify before Congress this week. In prepared remarks released Monday, Ray said FTX was ”overloaded” from late 2021 to 2022, during which time about $5 billion was spent buying a myriad of companies and investments, many of which were part of their past values. might just be They paid a price for them, with the company saying it received more than $1 billion in ”loans and other payments to insiders.”
Ray also confirmed press reports that FTX client funds are being commingled with Alameda Research assets. Alameda used customer funds for margin trading, which resulted in huge losses, Ray said.
Legal experts told CNBC that if the federal government were to file charges of wire fraud or wire fraud, Bankman-Fried could face up to life in prison without the possibility of supervised release. Such a harsh punishment would be unusual, but not extraordinary. Ponzi scheme mastermind Bernie Madoff was sentenced to 150 years in prison, effectively life in prison, for his massive Ponzi scheme. The collapse of FTX has already caused the death of BlockFi Lending and thrown the entire space into chaos.
Story by CNBC.