Sam Bankman-Fried, Cofounder and former CEO of the bankrupt crypto trading firm FTX was arrested in the Bahamas on Monday night after the U.S. attorney for the Southern District of New York delivered his sealed indictment to the Bahamian government.
Damian Williams, the U.S. Attorney for the Southern District of New York, said on Twitter that the federal government anticipated moving to “unseal the indictment in the morning.”
Bahamas Attorney General Ryan Pinder said that the United States was “likely to request his extradition.” The Bahamas and the United States have had an extradition treaty since the last century, but in 1990, the treaty was re-negotiated and now requires that an arrest warrant be issued by a judge or “other competent authority.”
Earlier in the day, Bankman-Fried had been expected to testify virtually before the House Financial Services Committee on Tuesday as is John Ray III who took over the FTX’s bankruptcy process. He and his team are rebuilding the finances from the bottom up and tracking its assets.
But tonight, Bahamian Prime Minister Philip Davis said, “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, with the continued cooperation of its law enforcement and regulatory partners in the United States and elsewhere,” continued his statement.
Following FTX’s collapse in November were reports that FTX had commingled customer funds with Bankman-Fried’s crypto hedge fund, Alameda Research, and that billions in customer deposits vanished.
In prepared remarks released Monday, Ray said that FTX went on a “spending binge” from late 2021 through 2022, when approximately ”$5 billion was spent buying a myriad of businesses and investments, many of which may be worth only a fraction of what was paid for them,” and that the firm made more than $1 billion in “loans and other payments...to insiders.” Several of Bankman-Fried’s family members have been involved in the company.
Ray also confirmed media reports that FTX customer funds were commingled with assets from Alameda Research. Alameda used client funds to do margin trading, which exposed them to massive losses.
Bankman-Fried could face life in prison without the possibility of supervised release. Ponzi schemer Bernie Madoff was sentenced to 150 years in prison. FTX’s collapse has already triggered the demise of BlockFi Lending.
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