FTX’s Sam Bankman-Fried Arrested in Bahamas

Sam Bankman-Fried, the disgraced founder of the collapsed cryptocurrency exchange FTX, was arrested in the Bahamas on Monday after United States prosecutors filed criminal charges.

“S.B.F.’s arrest followed receipt of formal notification from the United States that it has filed criminal charges against him and was likely to request his extradition,” New York Times quoted the government of the Bahamas to have said in a statement.

The arrest was the latest stunning development in one of the most dramatic falls from grace in recent corporate history.

Bankman-Fried, 30, was scheduled to testify in Congress yesterday, about the collapse of FTX, which was one of the most powerful firms in the emerging crypto industry until it imploded virtually overnight last month after a run on deposits exposed an $8 billion hole in its accounts.

Prosecutors for the Southern District of New York confirmed that Bankman-Fried had been charged and said an indictment would be unsealed yesterday.

Separately, the Securities and Exchange Commission said in a statement that it had authorised charges “relating to Mr. Bankman-Fried’s violations of our securities laws.”

The criminal charges against Bankman-Fried included wire fraud, wire fraud conspiracy, securities fraud, securities fraud conspiracy and money laundering, said a person with knowledge of the matter.

Bankman-Fried, who was the only person charged in the indictment, was taken into custody by the Bahamian authorities, the person said.

He was arrested shortly after 6 p.m. at his apartment complex in the Albany resort in the Bahamas, according to a statement from the Bahamian police.

The timing of when Mr. Bankman-Fried might be moved to the United States was unclear. While the Bahamas has an extradition treaty with the United States, the process could take weeks, and sometimes far longer if a criminal defendant contests it.

Bankman-Fried was cooperative during the arrest, according to a person familiar with the matter, and will be held overnight in a cell at a police station. He was scheduled to appear on Tuesday in Magistrate Court in Nassau, the capital of the Bahamas.

A spokesman for Bankman-Fried declined to comment. Nicholas Biase, a spokesman for the U.S. attorney’s office, also declined to comment.

The sudden collapse of the crypto exchange has left the industry stunned.

Federal prosecutors are said to be investigating whether Bankman-Fried manipulated the market for two cryptocurrencies, leading to their collapse.

Bankman-Fried’s mother and father, who teach at Stanford Law School, are under scrutiny for their connections to their son’s crypto business.

“Earlier this evening, Bahamian authorities arrested Samuel Bankman-Fried at the request of the U.S. government, based on a sealed indictment,” Damian Williams, the U.S. attorney for the Southern District of New York, said in a statement.

“We expect to move to unseal the indictment in the morning and will have more to say at that time.”

Once a golden boy of the crypto industry and a major donor to the Democratic Party, Bankman-Fried has seen his vast business and political empire collapse with stunning speed. His exchange filed for bankruptcy last month, and his personal fortune has dwindled to virtually nothing. While he used to be hailed as a modern-day John Pierpont Morgan, he’s now more often likened to Bernie Madoff, who orchestrated the largest Ponzi scheme in history.

Lawyers involved in the case expressed surprise at the suddenness of the arrest.

Bankman-Fried had been widely expected to face a criminal indictment. But complex white-collar fraud cases can take months to build. Until the arrest, he was slated to testify remotely about the FTX collapse in a hearing in front of the House Financial Services Committee on Tuesday.

“The American public deserves to hear directly from Mr. Bankman-Fried about the actions that’ve harmed over one million people,” Representative Maxine Waters, who chairs the committee, said in a statement. “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.”