US authorities say the former chief executive of the failed cryptocurrency exchange FTX Sam Bankman-Fried has been arrested in the Bahamas. The US attorney’s office in New York has said that the founder of FTX was arrested at the request of the US government.
Mr Bankman-Fried is under criminal investigation by US and Bahamian authorities following FTX's collapse last month. The firm filed for bankruptcy on November 11, when it ran out of money after the cryptocurrency equivalent of a bank run.
"Earlier this evening, Bahamian authorities arrested Samuel Bankman-Fried at the request of the US Government, based on a sealed indictment filed by the United States Attorney’s Office for the Southern District of New York," US attorney Damian Williams said in a statement. "We expect to move to unseal the indictment in the morning and will have more to say at that time."
Bahamian Attorney General Ryan Pinder said the Bahamas would "promptly" extradite Mr Bankman-Fried to the US once the indictment is unsealed and US authorities make a formal request. FTX is headquartered in the Bahamas and, since its failure, Mr Bankman-Fried has remained in his Bahamian luxury compound in Nassau.
A spokesman for Mr Bankman-Fried made no comment on Monday evening. Mr Bankman-Fried was one of the world’s wealthiest people on paper, with an estimated net worth of $32 billion (£26 billion).
He was a prominent personality in Washington, donating millions of dollars toward mostly left-leaning political causes and Democratic political campaigns. FTX grew to become the second-largest cryptocurrency exchange in the world.
That all unravelled quickly last month, when reports called into question the strength of FTX’s balance sheet. Customers moved to withdraw billions of dollars, but FTX could not meet all the requests because it apparently used its customers' deposits to cover bad bets at Mr Bankman-Fried’s investment arm, Alameda Research.
Mr Bankman-Fried said recently that he did not "knowingly" misuse customers’ funds, and said he believes his millions of angry customers will eventually be fully compensated. Mr Bankman-Fried’s arrest comes just a day before he was due to testify in front of the House Financial Services Committee, along with the company’s current chief executive, John Ray III.
Mr Ray, who took over FTX on November 11 and is a long-time restructuring specialist, has said in court filings that the financial conditions at FTX were worse than at Enron - the American energy, commodities, and services company that went bankrupt in 2001. Bahamian authorities plan to continue their own investigation into Mr Bankman-Fried. "The Bahamas and the United States have a shared interest in holding accountable all individuals associated with FTX who may have betrayed the public trust and broken the law," said Bahamian prime minister Phillip Davis in a statement.
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