Sam Bankman-Fried, the founder of failed crypto exchange FTX, was arrested in the Bahamas on Monday, 12 December, 2022.
According to CNN, he was arrested after US prosecutors filed criminal charges against him, according to a statement from the government of the Bahamas.
The Southern District of New York, which is investigating Bankman-Fried and the collapse of FTX and its sister trading firm, Alameda, confirmed his arrest on Twitter.
“Earlier this evening, Bahamian authorities arrested Samuel Bankman-Fried at the request of the US government, based on a sealed indictment filed by the SDNY,” wrote US attorney Damian Williams.
“We expect to move to unseal the indictment in the morning and will have more to say at that time.”
Bankman-Fried, was arrested without incident at his apartment complex shortly after 6 pm ET Monday in Nassau, and is set to appear in court on Tuesday, the Royal Bahamas Police Force said in a statement.
John J. Ray III, who stepped in to lead FTX after it filed for bankruptcy a month ago, is set to testify before the House Financial Services Committee at 10 a.m. Eastern Time. FTX founder Sam Bankman-Fried is also scheduled to speak.
The new CEO plans to tell the U.S. Congress on Tuesday that the cryptocurrency exchange FTX Trading had no reliable financial statements, let senior executives redirect customers’ funds and didn’t properly document transactions.
A representative for Bankman-Fried’s legal team didn’t immediately respond to CNN’s request for comment.
Ray has called FTX’s management the worst he’s ever seen in a 40-year career that includes overseeing the Enron bankruptcy, CBS reports.
In prepared remarks shared by the committee on Monday, Ray said FTX collapsed because the “very small group of grossly inexperienced and unsophisticated individuals” who were running the company “failed to implement virtually any of the systems or controls that are necessary for a company that is entrusted with other people’s money or assets.”
Among those failures, which Ray summarizes: FTX Group’s computers allowed senior executives to go into customers’ accounts and redirect assets; Alameda, the company’s research arm, could borrow unlimited amounts of money from FTX; nearly 500 investments made with FTX Group lacked transaction documentation; the company didn’t provide audited or reliable financial statements; and FTX didn’t have financial and risk-management personnel.
According to CBS, the testimony also says FTX lent over $1 billion to insiders and that the company went on a “spending binge” late last year, buying $5 billion worth of companies that Ray said are worth “only a fraction” of that amount.
FTX, once the second-largest crypto exchange in the world, raised almost $2 billion from investors over three years before it suddenly collapsed in November.
The Bahamas-based company shocked the crypto industry when it declared Chapter 11 bankruptcy last month.
