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  • Kyle Chua

FTX Collapse: Bahamian Authorities Arrest Bankman-Fried

Sam Bankman-Fried, the founder and former CEO of failed crypto exchange platform FTX, was arrested in the Bahamas after U.S. prosecutors filed charges against him.

Credit: Bloomberg

According to Reuters, the Bahamian attorney-general's office said it proceeded with the arrest on Monday, 12 December after receiving confirmation of the yet-to-be-unveiled charges against the embattled crypto tycoon. The U.S. is expected to soon request for his extradition to have him face his charges on American soil.


“Earlier this evening, Bahamian authorities arrested Samuel Bankman-Fried at the request of the U.S. Government, based on a sealed indictment filed by the United States Attorney’s Office for the Southern District of New York," U.S. prosecutor Damian Williams said in a statement.


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


The Securities and Exchange Commission said it's also filing separate charges on Tuesday, 13 December relating to Bankman-Fried’s “violations of securities laws".


While the charges have yet to be made public, The New York Times, citing a source close to the matter, reports they could include wire fraud, wire fraud conspiracy, securities fraud, securities fraud conspiracy and money laundering.


Bankman-Fried was scheduled to appear remotely before the U.S. Congress on Tuesday to testify under oath about his company's collapse.

Credit: AFP via Bangkok Post

FTX, which once ranked among the top crypto exchanges in the world, filed for bankruptcy on 11 November after a liquidity crisis left millions of customers unable to access their funds. The collapse was spurred by the revelation that sister company Alameda Research held about half of FTX's net assets in FTT (FTX tokens). FTT is relatively illiquid with no independent value, which poses a lot of risk for FTX's capital reserves, leading Binance, an early investor, to dump over US$2 billion worth of the token. The move triggered a wider selloff that would later send the exchange crashing.


There are allegations that the collapse stems from Bankman-Fried building a “backdoor” into FTX’s accounting system that allowed him to tamper with the company's financial records without tripping any red flags. He is said to have used this “backdoor” to transfer US$10 billion in FTX customer funds to Alameda.


Bankman-Fried denied the allegation, conceding that the collapse was due to the company's lack of corporate controls and risk management.

 
  • Sam Bankman-Fried, the founder of failed crypto exchange platform FTX, was arrested in the Bahamas after U.S. prosecutors filed charges against him.

  • The charges filed by the United States Attorney’s Office for the Southern District of New York have yet to be made public.

  • The arrest comes on the eve of Bankman-Fried's appearance before the U.S. Congress to testify about FTX's collapse.

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