FTX’s Sam Bankman-Fried Is Arrested in the Bahamas

Observe our reside protection of the arrest of FTX founder Sam Bankman-Fried.

Sam Bankman-Fried, the disgraced founding father of the collapsed cryptocurrency change FTX, was arrested within the Bahamas on Monday after U.S. prosecutors filed felony prices.

“S.B.F.’s arrest adopted receipt of formal notification from america that it has filed felony prices in opposition to S.B.F. and is more likely to request his extradition,” the federal government of the Bahamas stated in an announcement.

The arrest was the most recent gorgeous improvement in one of the dramatic falls from grace in latest company historical past. Mr. Bankman-Fried, 30, was scheduled to testify in Congress on Tuesday concerning the collapse of FTX, which was one of the highly effective corporations within the rising crypto business till it imploded nearly in a single day final month after a run on deposits uncovered an $8 billion gap in its accounts.

Prosecutors for the Southern District of New York confirmed that Mr. Bankman-Fried had been charged and stated an indictment can be unsealed on Tuesday. Individually, the Securities and Change Fee stated in an announcement that it had approved prices “referring to Mr. Bankman-Fried’s violations of our securities legal guidelines.”

The felony prices in opposition to Mr. Bankman-Fried included wire fraud, wire fraud conspiracy, securities fraud, securities fraud conspiracy and cash laundering, stated an individual with information of the matter.

Mr. Bankman-Fried, who was the one particular person charged within the indictment, was taken into custody by the Bahamian authorities, the particular person stated. He was arrested shortly after 6 p.m. at his condo advanced within the Albany resort within the Bahamas, in response to an announcement from the Bahamian police. The timing of when Mr. Bankman-Fried is perhaps moved to america was unclear. Whereas the Bahamas has an extradition treaty with america, the method can take weeks, and generally far longer if a felony defendant contests it.

Mr. Bankman-Fried was cooperative in the course of the arrest, in response to an individual aware of the matter, and shall be held in a single day in a cell at a police station. He’s scheduled to look on Tuesday in Justice of the Peace Courtroom in Nassau, the capital of the Bahamas.

A spokesman for Mr. Bankman-Fried declined to remark. Nicholas Biase, a spokesman for the U.S. lawyer’s workplace, additionally declined to remark.

“Earlier this night, Bahamian authorities arrested Samuel Bankman-Fried on the request of the U.S. authorities, based mostly on a sealed indictment,” Damian Williams, the U.S. lawyer for the Southern District of New York, stated in an announcement. “We count on to maneuver to unseal the indictment within the morning and could have extra to say at the moment.”

As soon as a golden boy of the crypto business and a significant donor to the Democratic Get together, Mr. Bankman-Fried has seen his huge enterprise and political empire collapse with gorgeous pace. His change filed for chapter final month, and his private fortune has dwindled to nearly nothing. Whereas he was hailed as a modern-day John Pierpont Morgan, he’s now extra typically likened to Bernie Madoff, who orchestrated the most important Ponzi scheme in historical past.

Legal professionals concerned within the case expressed shock on the suddenness of the arrest. Mr. Bankman-Fried had been broadly anticipated to face a felony indictment. However advanced white-collar fraud instances can take months to construct. Till the arrest, Mr. Bankman-Fried was slated to testify remotely concerning the FTX collapse in a listening to in entrance of the Home Monetary Providers Committee on Tuesday. The listening to continues to be set to go forward, simply with out Mr. Bankman-Fried’s testimony.

“The American public deserves to listen to instantly from Mr. Bankman-Fried concerning the actions that’ve harmed over a million individuals,” Consultant Maxine Waters, who chairs the committee, stated in an announcement. “The general public has been ready eagerly to get these solutions underneath oath earlier than Congress, and the timing of this arrest denies the general public this chance.”

A number of individuals aware of the investigation stated the pace with which the authorities moved in submitting felony and civil prices was a sign that prosecutors and regulators had acquired info from cooperating witnesses.

Mr. Bankman-Fried has been going through scrutiny from dozens of regulators internationally, together with the Justice Division, the S.E.C. and the Commodity Futures Buying and selling Fee. Prosecutors in Manhattan have been inspecting whether or not FTX broke the legislation by transferring billions in buyer funds to Alameda Analysis, a crypto hedge fund that Mr. Bankman-Fried additionally based and owned.

They’ve additionally centered on whether or not Mr. Bankman-Fried and his hedge fund engaged in market manipulation that will have helped trigger the failure of two outstanding cryptocurrencies final spring.

Ever since FTX collapsed, the S.E.C. and federal prosecutors have moved rapidly with requests for paperwork from varied events, together with a number of the large monetary corporations that invested as much as $2 billion within the crypto change starting final 12 months, stated two individuals briefed on the matter.

It’s unclear whether or not the federal authorities are taking a look at charging anybody else in reference to the collapse of FTX. It’s not unusual for an S.E.C. civil criticism to disclose extra details about the occasions that led to the submitting of prices than an indictment.

FTX’s collapse started early final month, when a run on deposits revealed an $8 billion gap within the firm’s funds. Mr. Bankman-Fried sought a lifeline from a rival firm, the enormous crypto change Binance, however the deal fell by means of after Binance examined FTX’s books.

Mr. Bankman-Fried rapidly grew to become a villain within the crypto business. A whole bunch of hundreds of consumers have funds trapped on FTX, with little prospect of getting them again anytime quickly.

Surprisingly for an government going through felony investigations, Mr. Bankman-Fried had given quite a few media interviews within the wake of FTX’s collapse. On the latest DealBook Summit, a New York Occasions occasion, he blamed “enormous administration failures” and sloppy accounting for his firm’s implosion, insisting that he “didn’t ever attempt to commit fraud” or knowingly dip into the funds of FTX prospects to finance different investments.

When FTX filed for chapter, Mr. Bankman-Fried stepped down as chief government. He was changed by John Ray, a seasoned company turnaround knowledgeable who oversaw the unwinding of the power buying and selling firm Enron after an accounting scandal in 2001.

In a chapter submitting final month, Mr. Ray stated that the administration of FTX mirrored a “full failure of company management.”

Mr. Ray was additionally scheduled to testify to the Home on Tuesday. In a ready assertion, he stated FTX had been a multitude.

The collapse stemmed “from absolutely the focus of management within the arms of a really small group of grossly inexperienced and unsophisticated people,” he wrote.