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Bankman-Fried Founder of Failed Crypto Empire FTX Arrested

Bankman-Fried FTX
Bankman-Fried was arrested in the Bahamas. Credit: Cointelegraph, CC BY 3.0/Wikipedia

Sam Bankman-Fried, the founder of the failed cryptocurrency exchange FTX, was arrested Monday in the Bahamas at the request of the U.S. government.

In a statement, the government of the Bahamas said the arrest came after officials received “formal notification from the United States that it has filed criminal charges against S.B.F. and is likely to request his extradition.”

This was confirmed by the U.S. Attorney for the Southern District of New York, Damian Williams, who said Bahamian officials arrested Bankman-Fried “at the request of the U.S. government, based on a sealed indictment.” He added that the indictment will likely be unsealed on Tuesday morning, “and we will have more to say at that time.”

On Nov. 11, FTX filed for bankruptcy after a run on deposits “exposed an $8 billion hole in the company’s accounts,” The New York Times writes.

According to a court filing last month, FTX owed its 50 largest creditors almost $3.1bn (£2.5bn).

“I’m really sorry, again, that we ended up here. Hopefully, things can find a way to recover,” Bankman-Fried, nicknamed the ‘King of Crypto’, wrote on Twitter at the time.

“I was shocked to see things unravel the way they did.”

It is unclear how much people who have funds in the exchange will get back at the end of bankruptcy proceedings – though many experts have warned it may be a small fraction of what they deposited.

FTX’s Bankman-Fried had a net worth of $15bn

The FTX exchange allowed customers to trade normal money for cryptocurrencies like Bitcoin.

Bankman-Fried was once viewed as a young version of legendary US investor Warren Buffett, and as recently as late October had a net worth estimated at more than $15bn.

He had become well known in Washington DC as a political donor, mostly to Democrat politicians or groups, supposedly supporting pandemic prevention and improved crypto regulation.

Bankman-Fried was soon being investigated by the Department of Justice and the Securities and Exchange Commission, with federal prosecutors in Manhattan looking into whether any laws were broken when FTX transferred billions of dollars to Alameda Research, a crypto hedge fund started and owned by Bankman-Fried.

Bankman-Fried made several appearances after the bankruptcy filing, and at the recent DealBook Summit, he pinned FTX’s collapse on “huge management failures.” He had been scheduled to testify before a Congressional committee on Tuesday.

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