Sam Bankman-Fried, the founder of FTX and a former crypto billionaire, was detained in the Bahamas after US authorities brought criminal charges against him.
According to General Ryan Pinder of the Bahamas’ authorities, Bankman-Fried was arrested in response to “unspecified criminal allegations” from US authorities, who will presumably “seek his extradition.” In a statement, Bahamas Prime Minister Philip Davis stated that his country shares the aim of the U.S. in bringing the FTX founder to justice.
“The Bahamas and the U.S. share a common interest in holding fully responsible all people associated with FTX that may have breached the public trust and violated the law,” Prime Minister Hubert Minnis stated. “While the US pursues criminal charges against SBF on an individual basis, The Bahamas will proceed with its own regulatory & criminal investigations into the failure of FTX, with the continuing cooperation of its law enforcement as well as regulatory colleagues in the US and internationally.”
The arrest occurred just before Bankman-Fried was scheduled to testify on Tuesday before the House Financial Services Committee.
“His arrest is the first tangible step taken by regulators to hold people responsible for FTX’s multibillion-dollar collapse last month.”
“FTX and its affiliates declared bankruptcy last month, and Bankman-Fried resigned as CEO. The crypto trading company fell spectacularly after a run on assets akin to a bank run.”
John J. Ray III took over as CEO of FTX and will appear before Congress this week. Ray stated in his prepared remarks before his testimony that he had never seen “such an awful failure of corporate controls throughout every level within an organization, from the absence of financial statements to a total collapse of any internal controls or management whatsoever.”
“Although our investigation is ongoing and comprehensive discoveries will have to await its end,” his remarks added, “the FTX Group’s failure appears to arise from the complete concentration of power in the hands of a very small group of extremely incompetent and unsophisticated persons who failed to install hardly any of the procedures or controls that are required for a corporation that is entrusted with other people’s money and assets.”
