Sam Bankman Fried, a disgraced cryptocurrency billionaire, was detained on Monday in the Bahamas at the request of the US, according to US authorities who want to charge him following the dramatic failure of his FTX platform.
The arrest occurs the night before Bankman-Fried was to testify under oath before a US Congress hearing about the crypto exchange’s sudden death.
The 30-year-old has recently disregarded legal counsel and increased his public appearances, giving his explanation for his company’s abrupt demise, frequently through video link from the Bahamas, where his company is situated.
The southern district of New York’s senior prosecutor, Damian Williams, tweeted that Samuel Bankman-Fried had been detained earlier this evening at the request of the US government and in accordance with a sealed indictment.
He continued, “We anticipate moving to unseal the indictment in the morning and will have more to say at that time.
Bankman-Fried was to be held in detention prior to an anticipated request for his extradition by the United States, according to a news release from the Bahamas attorney general’s office.
Bankman-Fried was detained early that evening at his apartment complex in Nassau, the capital of the Bahamas, according to a police statement and information released by the prime minister’s office in the country.
He was brought into custody without any problems, according to the statement, and was scheduled to show up in court in Nassau on Tuesday.
Bankman-Fried had, more than anyone, symbolized the seeming rise of cryptocurrencies as an ethical investment and no anymore a disfavored get-rich-quick scheme scorned by the banking establishment.
Celebrities promoted his FTX platform in marketing campaigns, and the cyber-whiz child established himself as a regular visitor to Washington, D.C., where he contributed tens of millions of dollars to political causes.
The implosion of FTX, which had been valued at $32 billion, came quickly after a November 2 investigation on connections between FTX and Alameda, a trading firm that Bankman-Fried also owned.
The research revealed that a significant portion of Alameda’s financial structure was based on the FTX-created FTT coin, which had no independent worth.
Celebrities promoted his FTX platform in advertising campaigns, and the internet whiz child established a regular presence in Washington, D.C., where he donated tens of millions of dollars to political causes.
A November 2 exposé on connections between FTX and Alameda, a trading firm also under Bankman-control, Fried’s contributed to FTX’s quick implosion after it had grown to a $32 billion valuation.
The investigation revealed how heavily FTX-created FTT currency a token with no independent value was used to support Alameda’s balance sheet.
Alameda and FTX, where Alameda had sizable trading holdings, were both shaken when the price of FTT fell in the first few days of November.
On November 11, FTX and nearly 100 affiliated firms filed for bankruptcy protection, reeling from consumer withdrawals and short almost $8 billion.
Read More; EX-FTX CEO Sam Bankman Fried says “He didn’t try to commit any fraud”
This drew the attention of authorities, prosecutors, and irate customers who had bought into the bitcoin euphoria.
FTX is suspected of fraud for allegedly supporting Alameda with billions of dollars in client cash that is now almost certainly lost forever.
Whether Bankman-Fried manipulated the market or gave Alameda access to insider information without authorization is another matter of debate.
In conversations with the media, Bankman-Fried has acknowledged faults but denied intending to defraud his clients.
According to FTX CEO John Ray, who joined the organization after the fiasco, the issues arose because power was “in the hands of a very small core of severely incompetent and naive persons.”
“Never in my career have I seen such a catastrophic breakdown of corporate controls at every level of an organization, from the lack of financial statements to a complete collapse of any internal controls or governance whatsoever,” Ray said in prepared remarks.
Major concerns about the long-term viability of cryptocurrencies have been raised by FTX’s collapse, and other platforms and organizations that benefited from the popularity of Bitcoin and other cryptocurrencies are now under a lot of pressure.
