Sam Bankman-Fried, founder of the failed cryptocurrency exchange FTX, was arrested in the Bahamas following a request from US officials.
Bankman-Fried, popularly known by his initials SBF, was scheduled to appear at a US Congress hearing in which he was to testify under oath about the exchange’s sudden and spectacular collapse that led to investors losing billions and domino effect of more companies failing and filing for bankruptcy.
The Bahamas prime minister’s office shared news of the arrest in capital Nassau, where he was to appear in court on Tuesday. A press release from the attorney general’s office in the Bahamas said Bankman-Fried was to be held in custody before an expected request for his extradition by the US.
Damian Williams, lead prosecutor for the district, tweeted: “Earlier this evening, Bahamian authorities arrested Samuel Bankman-Fried at the request of the US Government, based on a sealed indictment filed by the southern district of New York.
“We expect to move to unseal the indictment in the morning and will have more to say at that time.”
FTX, launched in 2019 and based in the Bahamas, filed for bankruptcy on November 11 after it struggled to raise money to stave off collapse as traders rushed to withdraw $6 billion from the platform in just 72 hours. Since then, it has emerged that SBF used nearly $10 billion in customer funds to prop up his trading business.
The fall of FTX has caused major doubts on the long-term viability of cryptocurrency and heaped stress on other platforms and entities that rode the success of Bitcoin and other currencies. In recent media interviews, Bankman-Fried has admitted to mistakes, but has denied intent to fraud his customers.
AFP reported that FTX CEO John Ray, who came to the company after the debacle, was to tell Congress on Tuesday that the problems rose because control was “in the hands of a very small group of grossly inexperienced and unsophisticated individuals”.
“Never in my career have I seen such an utter failure of corporate controls at every level of an organisation, from the lack of financial statements to a complete failure of any internal controls or governance whatsoever,” Ray said in prepared remarks.
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