Just over a month after crypto exchange FTX went bankrupt, Ryan Pinder, the Attorney General of the Bahamas, announced the arrest of its founder and former CEO, Sam Bankman-Fried (SBF).
According to the arrest reportedly came after the US government notified the Bahamas of criminal charges against Bankman-Fried and said it would likely seek his extradition to the country where he lived and which had served as a base of operations for FTX. U.S. Attorney for the Southern District of New York, Damian Williams, confirmed the arrestsaying in a statement: “We expect to move tomorrow morning to unlock the indictment and will have more to say by then.”
US Damian Williams: Earlier in the evening, Bahamian authorities arrested Samuel Bankman-Fried at the request of the US government, based on a sealed indictment filed by the SDNY. We expect to take action tomorrow morning to unlock the charges and will have more to say by then.
— U.S. Attorney SDNY (@SDNYnews) December 12, 2022
The collapse of FTX revealed that SBF and its associates appear to have used customer deposits at FTX to support its other company, the Alameda Research trading firm. down operations.
Bankman-Fried was scheduled to testify in congressional hearings this week, and in recent weeks he’s been on a seemingly non-stop media tour of interviews to explain what was happening at a company that, for a time, made him one of the world’s most famous. youngest billionaires.
John J. Ray III, who took over from Bankman-Fried as CEO of FTX and whose qualifications include overseeing the corporate cleanup after Enron imploded, has already said, “Never in my career have I seen such a complete failure. of corporate controls and such a complete absence of reliable financial information as has happened here.
In prepared testimony (pdf) filed today ahead of Ray’s appearance before the House Financial Services Committee, he laid out five points that give us at least a hint about the charges Bankman-Fried may face:
While many things are still unknown at this stage and many questions remain, we know the following:
First, customer assets from FTX.com were mixed with assets from the Alameda trading platform.
Second, Alameda used client money to engage in margin trading, causing huge losses for client money.
Third, the FTX Group continued spending in late 2021 through 2022, spending approximately $5 billion buying a host of companies and investments, many of which are worth only a fraction of what was paid for them.
Fourth, loans and other payments to insiders were made in excess of $1 billion.
Fifth, Alameda’s business model as a market maker required the deployment of funds on various third-party exchanges, which was inherently insecure and compounded by the limited protections offered in certain foreign jurisdictions.
“While I am disappointed that we cannot hear from Mr Bankman-Fried… we remain committed to getting to the bottom of what happened, and the Cmte looks forward to beginning our investigation by hearing from Mr. John Ray III tomorrow.”
– Chair @RepMaxineWaters— U.S. House Committee on Financial Services (@FSCDems) December 13, 2022
Congresswoman Maxine Waters (D-CA), chair of the House Financial Services Committee, said in a statement that “I am surprised to learn that Sam Bankman-Fried has been arrested in the Bahamas under the direction of the United States Attorney for the Southern District of New York. It’s time for the trial to bring Mr. Bankman-Fried to justice.”
“While I am disappointed that we will not be able to hear from Mr Bankman-Fried tomorrow, we remain committed to getting to the bottom of what happened, and the committee looks forward to beginning our investigation by hearing from the Lord John Ray III tomorrow.”
SBF conducted at least two live interviews earlier Monday, including one live chat with Forbes reporters and a Twitter Spaces chat with “Unusual Whales.” Answering questions while apparently playing the game Storybook Brawlthe New York Post According to reports, he said, “I don’t think I’ll be arrested,” just hours before he was actually arrested.
To be last tweet was posted at 4:44 PM ET.
Image: Office of the Attorney General and Department of Legal Affairs, Commonwealth of the Bahamas
Update December 13, 2:30 AM ET: Added statement from U.S. Representative Maxine Waters.
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