The founder of crypto exchange FTX has been arrested.
(Photo: Bloomberg)
Denver The founder of bankrupt crypto exchange FTX, Sam Bankman-Fried, was unexpectedly arrested in the Bahamas on Monday. This was announced by the responsible Attorney General Ryan Pinder. Accordingly, Bankman-Fried’s arrest was preceded by a notification from the United States: The United States had filed criminal charges against him. The Bahamas would comply with a likely US extradition request “promptly” once the indictment was made public and a formal request made, Pinder said.
Bankman-Fried was scheduled to testify before the US Congress on Tuesday, but he would be connected from his adopted country, the Bahamas.
FTX was once the third-largest crypto exchange, but filed for bankruptcy in the US in mid-November. The public prosecutor’s office and the US Securities and Exchange Commission have started investigations. There are allegations of fraud in the billions.
Bankman-Fried admitted to mistakes in an interview with the Handelsblatt, but denied criminal responsibility for the crash of his company. “I’ve never tried to cheat,” he insisted.
Top jobs of the day
Find the best jobs now and
be notified by email.
US Attorney Damian Williams said the lawsuit is currently sealed. However, it will be made publicly available on Tuesday. According to the New York Times, prosecutors have accused him of money laundering, securities and wire fraud.
The Prime Minister of the Bahamas, Philip Davis, said the Bahamas and the US have “a common interest in holding accountable those who have abused public trust and broken the law in connection with FTX.” Both the US and the Bahamas would continue their independent investigations into the case. The police in the Bahamas told CNBC that Bankman-Fried would appear before a judge on Tuesday.
Davis and Bankman-Fried attended a major crypto conference in the Bahamas organized by FTX at the end of April. The company had relocated its headquarters to the Bahamas and wanted to build a new headquarters there for $60 million. Other crypto companies should also have settled in the tax haven.
Bankman-Fried said bankruptcy was a mistake
At its peak, FTX was valued at $32 billion and attracted prominent investors. In recent weeks there has been speculation as to why Bankman-Fried was only under the supervision of the authorities in the Bahamas, but was not arrested and jailed. The FTX founder himself downplayed concerns about it. Thinking about an indictment and a possible prison sentence is currently not his priority, Bankman-Fried told the Handelsblatt on Wednesday. He wants to focus on helping customers get their funds back.
There have been repeated tensions with the new CEO of FTX, the insolvency administrator John Ray. Bankman-Fried said it was a mistake to file for bankruptcy. He still tried to undo the step, but he didn’t succeed. Among other things, Bankman-Fried dislikes the fact that customers in the USA, but also in Europe and Japan are not paid out, although this is possible in principle. The subsidiaries were managed separately from the parent company’s business. In addition, Ray and dozens of the hired consultants collect high salaries. Ray’s hourly rate is $1,300, which industry insiders say is standard market practice.
Ray, on the other hand, has made serious allegations against Bankman-Fried. “In my entire professional life I have never experienced such a failure of the internal control systems and such a complete lack of trustworthy financial information as here,” he ranted at the start of the bankruptcy proceedings in November. He, too, is scheduled to testify before Congress on Tuesday.
More: US investors bullish ahead of inflation data and rate decision – Wall Street closes higher