Topline
FTX founder Sam Bankman-Fried was arrested in the Bahamas after U.S. prosecutors filed criminal charges, the U.S. Department of Justice said late Monday, capping off a dramatic fall for the one-time billionaire whose cryptocurrency empire collapsed amid allegations of improper conduct.
Sam Bankman-Fried of FTX photographed in March 2021 by Virgile Simon Bertrand for Forbes.
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Key Facts
Bankman-Fried’s arrest in the Bahamas—which is home to FTX’s headquarters—came after “receipt of formal notification from the United States that it has filed criminal charges against [Bankman-Fried] and is likely to request his extradition,” the Bahamian Attorney General’s office said in a statement obtained by CNBC and other outlets.
The U.S. Attorney’s office in Manhattan said in a tweet Bankman-Fried was arrested “at the request of the U.S. Government, based on a sealed indictment.”
It’s unclear what criminal charges Bankman-Fried will face, but the U.S. Attorneys office said it plans to unseal the indictment Tuesday morning.
Forbes has reached out to the DOJ for further comment.
Key Background
Just months ago, 30-year-old Bankman-Fried was widely seen as one of the cryptocurrency industry’s fastest-rising stars, amassing a net worth estimated at $26.5 billion as crypto exchange FTX and hedge fund Alameda Research soared. But both firms crashed in dramatic fashion last month, following revelations that their fortunes were closely intertwined—and that they had taken serious risks. Industry news outlet Coindesk revealed in early November a large portion of Alameda’s balance sheet was made up of an FTX-issued token called FTT, and after the exchange crashed, several outlets reported Alameda had quietly borrowed billions of dollars in FTX customer funds. A selloff of FTT triggered solvency problems for the exchange, leading FTX to file for bankruptcy and causing Bankman-Fried to step aside as the exchange’s CEO, replaced by an executive who wrote in bankruptcy filings: “Never in my career have I seen such a complete failure of corporate controls … as occurred here.” Bankman-Fried has publicly apologized and insisted FTX’s collapse was due to mistakes on his part rather than fraud, but U.S. authorities quickly opened investigations into the crash, and some legal experts have argued its founder could face criminal jeopardy.
Surprising Fact
Bankman-Fried has spoken to the press extensively in recent weeks despite predictions of legal peril, giving lengthy interviews to Forbes, the New York Times and other outlets. In a conversation with the Times, Bankman-Fried claimed he wasn’t focused on possible criminal charges.
This is a developing story; it will be updated.
Source: https://www.forbes.com/sites/joewalsh/2022/12/12/sam-bankman-fried-arrested-in-bahamas-as-us-files-criminal-charges-officials-say/