US Prosecutors Criminally Charge Former FTX CEO Sam Bankman-Fried

Sam Bankman-Fried, the founder and CEO of FTX until a liquidity crisis forced the Bahamas-based cryptocurrency exchange to declare bankruptcy, was arrested in The Bahamas on Monday after being charged criminally by US prosecutors.

The Bahamas’ attorney general’s office said it went ahead with the arrest after receiving formal confirmation of the charges against Bankman-Fried, and it expects him to be extradited to the United States.

A spokesman for the United States Attorney’s Office in Manhattan confirmed Bankman-arrest Fried’s in The Bahamas, but declined to comment on the charges.

“Earlier this evening, Bahamian authorities arrested Samuel Bankman-Fried at the request of the United States Government, based on a sealed indictment filed by the United States Attorney’s Office for the Southern District of New York,” said US prosecutor Damian Williams. “We anticipate that the indictment will be unsealed in the morning and will have more to say at that time.”

Bankman-lawyer, Fried’s Mark Cohen, did not immediately respond to a request for comment.

FTX, one of the world’s largest cryptocurrency exchanges, declared bankruptcy on November 11 in one of the most high-profile crypto meltdowns, after traders withdrew $6 billion from the platform in three days and rival exchange Binance abandoned a rescue deal.

The liquidity crisis occurred after Bankman-Fried secretly transferred $10 billion in FTX customer funds to Alameda, according to Reuters, citing two people familiar with the situation. According to the sources, at least $1 billion in customer funds had vanished.

According to Bankman-Fried, the company did not “secretly transfer,” but rather misread its “confusing internal labelling.” When asked about the missing funds, he said, “???”

Bankman-Fried acknowledged risk management failures but sought to distance himself from accusations of fraud in a series of interviews and public appearances in late November and December, saying he never knowingly commingled customer funds on FTX with funds at his proprietary trading firm, Alameda Research.

“I never attempted to commit fraud,” Bankman-Fried said in a Nov. 30 interview at the New York Times Dealbook Summit, adding that he does not believe he is criminally liable.

Bankman-Fried resigned as FTX’s CEO on the same day the company filed for bankruptcy.

A source familiar with the investigation told Reuters that the US Attorney’s Office in Manhattan, led by veteran securities fraud prosecutor Williams, began investigating how FTX handled customer funds in mid-November.

The Securities and Exchange Commission and the Commodity Futures Trading Commission both launched investigations.

US crypto investors also sued Bankman-Fried, alleging that he and a slew of celebrities who promoted FTX engaged in deceptive practices, resulting in $11 billion in damages for the investors.

The demise of FTX was the latest upheaval in the cryptocurrency industry this year. The overall crypto market has declined as a result of a string of meltdowns that have brought down other key players such as Voyager Digital and Celsius Network.

FTX Group Bankruptcy Filing Shows $1.24 Billion In Cash

FTX Group Bankruptcy Filing Shows $1.24 Billion In Cash