Sam Bankman-Fried Arrested, Faces Extradition to the U.S.

Disgraced founder and ex-CEO of FTX Sam Bankman-Fried has been arrested in the Bahamas. The arrest follows U.S. prosecutors’ filing of criminal charges against Bankman-Fried.

According to a statement from the government of the Bahamas, the arrest was done in compliance with a formal notification from U.S. prosecutors. It is likely that upon the news of the arrest, the U.S. will then request for Bankman-Fried’s extradition. Bahamian authorities have detailed that Bankman-Fried was arrested at his apartment complex at Albany, a beach resort in the country.

The Bahamas has an existing extradition treaty with the U.S. However, due to the circumstances and operational difficulties, processing the extradition may take longer, and the criminal defendant may seek legal remedy and contest the extradition, further lengthening the process.

Bankman-Fried is set to testify to the U.S. Congress today, 13th December, pending legal inquiry into his involvement with the collapse and bankruptcy of FTX, the crypto exchange he headed. It was revealed after a series of investigations that FTX, under his wing, had some $8 billion or so worth of missing reserves. The charges against Bankman-Fried have been confirmed by prosecutors from the Southern District of New York, with an indictment to be served today, as he appears at the Magistrate Court in Nassau.

In a separate statement, the Securities and Exchange Commission has disclosed that it has also authorized charges that are in relation to Bankman-Fried’s alleged violations of a number of securities laws, which the regulator actively oversees.

Said charges include wire fraud and wire fraud conspiracy, securities fraud and securities fraud conspiracy, and money laundering. The indictment has only specifically named Bankman-Fried so far, but is open to extension once the inquiries reveal how many more are involved in one of the crypto industry’s worst scandals of late. Persons related to the case include Caroline Ellison, former CEO of Alameda Research, and Gary Wang, a co-founder.

The collapse of FTX began when reports revealed a highly concentrated position of FTT coins, which functioned as the crypto exchange’s self-issued tokens. Alameda Research, which operated as FTX’s hedge fund arm, used the positions as collateral for billions worth of crypto loans.

The scandal later prompted Binance’s Changpeng Zhao to announce that they are to sell their stake in FTT, a critical point which caused a wave of withdrawals from FTX, crippling the exchange. Days into the chaos, FTX declared bankruptcy and froze its assets.

FTX is now headed by John Ray, who assumed the position on November 11 after the bankruptcy was formally filed. Ray said in a prepared statement to testify to the Congress that FTX’s collapse was caused by “the absolute concentration of control in the hands of a very small group of grossly inexperienced and unsophisticated individuals.”