Bahamas Attorney General’s Office released a statement Monday saying that Sam Bankman-Fried, co-founder and former CEO of defunct cryptocurrency exchange FTX, was detained in the country.
According to the Bahamas AG office, the arrest occurred after the US government informed them that criminal charges had been brought against Bankman-Fried and that extradition would most likely be sought.
US Attorney for the Southern District of New York Damian Williams confirmed the arrest made on Monday and released the sealed indictment the following day. Wire fraud, commodities fraud, securities fraud, money laundering, and violation of campaign finance rules are only some of the eight charges of conspiracy and criminal action against Bankman-Fried.
Separately, on Tuesday, the US Securities and Exchange Commission filed civil accusations against Bankman-Fried for “orchestrating a plan to deceive equity investors in FTX Trading Ltd.” and other alleged violations of securities law.
SEC Chairman Gary Gensler released a statement alleging that Sam Bankman-Fried “constructed a house of cards on a foundation of lies while promising investors that it was one of the safest structures in crypto.” To be in conformity with our laws, crypto platforms must heed the “clarion call” that the alleged fraud conducted by Mr. Bankman-Fried provides.
“Time-tested protections,” as Gensler put it, “such as appropriately securing client monies and separating competing lines of business,” are essential components of compliance programs.
After the troubled cryptocurrency exchange filed for Chapter 11 bankruptcy protection in November, S. Bankman-Fried resigned as CEO. The bitcoin exchange in the Bahamas was a major participant, and Bankman-Fried had a stellar reputation for influencing lawmakers on both sides of the aisle. However, FTX’s collapse has cast cryptocurrencies in a negative light and left consumers wondering whether they will ever see their money again.
Over a third of Alameda Research’s assets were FTT tokens produced by FTX, and when this information became public, it set off a chain reaction that ultimately resulted in the shutdown of Alameda Research and the bankruptcy filing of FTX in November. Millions of dollars disappeared from investors’ accounts overnight.
“I headed FTX as its chief executive officer. So, the buck stops with me, “Bankman-Fried said on stage at the Dealbook Summit hosted by The New York Times on November 30. He insists he is innocent and has no criminal motive.
Allegations of fraud and improper management of money by FTX are being looked into by the US Department of Justice and other relevant authorities. Bankman-Fried has repeatedly denied any wrongdoing in regards to the handling of its customers’ funds.
On Tuesday, the US House Financial Services Committee was scheduled to hear from Bankman-Fried. The trial continued without him. A copy of Bankman-prepared Fried’s statement for the court was discovered and published by Forbes, in which he said that his top priority was to “do right by the clients of FTX International who were damaged.”
On Tuesday, FTX’s new CEO, John Ray, testified at the hearing. The FTX bankruptcy was attributed to “simple, old embezzlement,” he said.
The Prime Minister of the Bahamas, Philip Davis, has said that the government is initiating its own criminal and regulatory investigations into the demise of FTX.
