Former FTX CEO Sam Bankman-Fried has been arrested in the Bahamas

NEW YORK — Former CEO of failed cryptocurrency company FTX, Sam Bankman-Fried, has been arrested in the Bahamas at the request of the US government, US and Bahamian authorities said on Monday.

The arrest came Monday after the US filed a criminal complaint that US Attorney Damian Williams said is due to be unsealed on Tuesday.

Bankman-Fried had been under criminal investigation by US and Bahamian authorities following FTX’s collapse last month. The firm filed for bankruptcy on Nov. 11 when it ran out of money following the cryptocurrency equivalent of a bank run.

“We expect to unseal the charges tomorrow morning and will have more to say at that point,” Williams said.

Bahamas Attorney General Ryan Pinder said the Bahamas would extradite Bankman-Fried to the US “promptly” once the indictments were unsealed and US authorities made a formal request. FTX is headquartered in the Bahamas, and Bankman-Fried has mostly stayed at its luxury Bahamian complex in Nassau since the company’s failure.

A spokesman for Bankman-Fried did not comment Monday night. Bankman-Fried has the right to appeal his extradition, which could delay, but probably not stop, his extradition to the US

Bankman-Fried’s arrest comes just a day before he was due to testify before the House Financial Services Committee. Rep. Maxine Waters, D-Calif., chair of the committee, said she was “disappointed” that the American public and clients of FTX would not see Bankman-Fried testify under oath.

Bankman-Fried was one of the richest people in the world on paper with an estimated net worth of $32 billion. He was a prominent figure in Washington and donated millions of dollars to mostly left-leaning political causes and Democratic political campaigns. FTX grew to become the second largest cryptocurrency exchange in the world.

That all quickly unraveled last month as reports questioned the strength of FTX’s balance sheet. Clients wanted to withdraw billions of dollars, but FTX couldn’t fulfill all requests because it appears to have used its clients’ deposits to cover bad bets at Alameda Research, Bankman-Fried’s investment arm.

Bankman-Fried recently said he had not “knowingly” misappropriated his clients’ funds and said he believes his millions of disgruntled clients will eventually recover.

The House Financial Services Committee is also expected to hear testimony from current CEO John Ray III on Tuesday. Ray, who acquired FTX on Nov. 11 and is a longtime restructuring specialist, said in court filings that FTX’s financial conditions are worse than Enron’s.

The Bahamian authorities plan to continue their own investigation into Bankman-Fried.

“The Bahamas and the United States have a common interest in holding accountable all individuals associated with FTX who may have betrayed public trust and broken the law,” Bahamian Prime Minister Philip Davis said in a statement.

The U.S. Securities and Exchange Commission said it had approved separate counts related to alleged violations of securities laws and will publicly file them Tuesday.

Copyright © 2022 by The Associated Press. All rights reserved. Former FTX CEO Sam Bankman-Fried has been arrested in the Bahamas

Laura Coffey

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