Founder of Crypto Firm FTX Sam Bankman-Fried Arrested in Bahamas

Sam Bankman-Fried testifies during a hearing before the House Financial Services Committee at Rayburn House Office Building on Capitol Hill on Dec. 8, 2021. Alex Wong/Getty Images

The Bahamas attorney general’s office on Monday announced the arrest of former FTX CEO Sam Bankman-Fried pending extradition to the United States, weeks after the cryptocurrency exchange collapsed.

U.S. Attorney Damian Williams confirmed the arrest at the request of the U.S. government in a statement on Twitter.

“Earlier this evening, Bahamian authorities arrested Samuel Bankman-Fried at the request of the U.S. Government, based on a sealed indictment filed by the SDNY,” Williams said, referring to 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.”

Bankman-Fried, 30, was arrested after the United States notified the Bahamas attorney general’s office that it had filed criminal charges against the young former crypto billionaire and would likely request extradition. It’s unclear what charges he'll face.

Bahamas Attorney General Sen. Ryan Pinder said that Bankman-Fried had been arrested and detained under the Bahamas Extradition Act.

“At such time as a formal request for extradition is made, The Bahamas intends to process it promptly, pursuant to Bahamian law and its treaty obligations with the United States,” Pinder said in a statement.

Bahamas Prime Minister Philip Davis said that the Bahamas and the United States share a common interest in holding responsible those people affiliated with FTX who may have betrayed the public trust and broken the law.

“While the United States is pursuing criminal charges against SBF individually, The Bahamas will continue its own regulatory and criminal investigations into the collapse of TX, with the continued cooperation of its law enforcement and regulatory partners in the United States and elsewhere,” Davis said, referring to Bankman-Fried as “SBF.”

Pinder stated that the Bahamas would “promptly” extradite Bankman-Fried to the United States once the indictment is unsealed and U.S. officials make a formal request.

The Albany resort, residence of Sam Bankman-Fried and other FTX and Alameda executives in Nassau, Bahamas, on Dec. 3, 2022. Nicholas Ewing/ The Epoch Times

FTX

Founded in 2019, FTX was one of the world’s largest cryptocurrency exchanges. The firm was valued at $32 billion at its peak, while Bankman-Fried’s net worth was estimated to be $26 billion.

At the height of his success, Bankman-Fried was hailed as a philanthropist and the second-largest individual donor to the Democratic Party, providing about $40 million in the 2022 election. He claims to have contributed “about the same amount” to Republicans confidentially to avoid press scrutiny.

FTX collapsed in November amid a liquidity crisis exacerbated by larger rival Binance’s decision to withdraw from a prospective rescue arrangement.

Traders quickly withdrew billions from the platform, and the business eventually filed for Chapter 11 bankruptcy on Nov. 11. Millions of FTX users lost access to their crypto wallets.

Concerns have been raised about the $1 billion in client cash that appears to have vanished from the bankrupt cryptocurrency exchange. Meanwhile, Bankman-Fried claims to only have $100,000 in his bank account and denies having any “hidden funds.”

Bankman-Fried told the Wall Street Journal on Dec. 8 that FTX customers deposited more than $5 billion in accounts of his trading company Alameda Research. But those funds are now gone, he said.

Those funds “were wired to Alameda, and … I can only speculate about what happened after that,” he said.

FTX and Alameda Research logos are seen in Jakarta, Indonesia, on Nov. 11, 2022. Poetra.RH/Shutterstock

Bankman-Fried has stated that he did not engage in any fraudulent behavior and did not knowingly misuse funds.

It is alleged that billions in FTX customer funds flowed to Alameda Research, a now-bankrupt hedge fund that was a sister company to FTX—both owned by Bankman-Fried. Caroline Ellison, 28, was the CEO of Alameda Research.

Bankman-Fried revealed at a New York Times DealBook Summit earlier this month that Alameda received payments from FTX exchange customers because the exchange did not have its own bank accounts when it was first formed.

Among the allegations leveled against Bankman-Fried was that money that FTX customers thought they were investing in cryptocurrency for their personal accounts was used to fund loans and cover speculative losses at Alameda Research.

He said customers who wanted to trade crypto on the FTX exchange “were wiring money to Alameda Research to get credited” in the meantime.

The purchase of real estate properties is among the concerns raised about the possible misuse of FTX funds, including the purchase of a house using FTX funds in the name of Bankman-Fried’s parents, Barbara Fried and Joseph Bankman.

Financial regulators and authorities in both the United States and the Bahamas are currently investigating the company’s collapse.

Testimony

Bankman-Fried was expected to testify on FTX’s collapse via zoom before the House Financial Services Committee on Tuesday. FTX donated more than $300,000 to nine members of the House Financial Services Committee.

Last week, House Financial Services Committee Chair Maxine Waters (D-Calif.) wrote that Bankman-Fried was “requested to testify” voluntarily but that a subpoena was “definitely on the table.”

Sens. Sherrod Brown of (D-Ohio) and Pat Toomey (R-Pa.) also asked him to appear because of “significant unanswered questions” regarding the firm’s collapse.

“I still do not have access to much of my data—professional or personal. So there is a limit to what I will be able to say, and I won’t be as helpful as I’d like. But as the committee still thinks it would be useful, I am willing to testify on the 13th,” he wrote in response to Waters’s post on Twitter.

Prior to his arrest on Monday, Democratic and Republican members of the Senate Committee on Banking criticized Bankman-Fried after he declined to testify before their panel.

In a joint statement, Sen. Sherrod Brown (D-Ohio), chairman of the panel, and Sen. Pat Toomey (R-Pa.), ranking member of the panel said that “virtually every CEO, financial regulator, and administration official for Republicans and Democrats” had agreed to testify in front of both the Senate and House when called upon.

“We have offered Sam Bankman-Fried two different dates for providing testimony before the Senate Banking, Housing, and Urban Affairs Committee, and are willing to accommodate virtual testimony,” they said in their statement.

“He has declined in an unprecedented abdication of accountability. Given that Bankman-Fried’s counsel has stated they are unwilling to accept service of a subpoena, we will continue to work to have him appear before the Committee. He owes the American people an explanation.”

Katabella Roberts contributed to this report.