Sam Bankman-Fried arrested over FTX collapse ahead of US Congressional hearing

Rick Steves

SBF planned to point fingers at Sullivan and Cromwell lawyers, who allegedly pressured him to nominate John J. Ray III. A few minutes after signing Ray as CEO, he allegedly changed his mind with a billion-dollar offer to keep FTX afloat but was told it was too late.

Sam Bankman-Fried

Disgraced former CEO of collapsed crypto exchange FTX, Sam Bankman-Fried, was arrested in the Bahamas on Monday at the request of U.S. prosecutors. He was due to testify before the United States Congress today.

He will now be unable to testify, according to Congresswoman Maxine Waters, who said in a statement she was surprised to hear of his arrest.

Reuters has reported that a draft copy of Sam Bankman-Fried’s testimony would point fingers at Sullivan and Cromwell lawyers, who allegedly pressured him to nominate John J. Ray III as the new chief executive.

A few minutes after signing Ray as CEO, he allegedly changed his mind with a billion-dollar offer to keep FTX afloat but was told it was too late.

Arrest follows extraordinary mismanagement of FTX

FTX was launched in 2019 with headquarters in the Bahamas and with a global presence, including in the United States via FTX US. The crypto exchange filed for bankruptcy on November 11 after a $6 billion bank run in the 72 hours prior as well as a deterioration of collateral due to improper risk management.

Sam Bankman-Fried’s extraordinary mismanagement of clients’ assets has since become a story of suspected fraud and that’s why U.S. prosecutors have requested his arrest in the Bahamas.

On 12 December 2022, the Office of the Attorney General of The Bahamas announced his arrest by The Royal Bahamas Police Force. The Bahamas government said it followed receipt of formal notification from the United States that it has filed criminal charges against SBF and is likely to request his extradition.

Although charges will only be revealed today, he has reportedly been arrested with fraud and money laundering charges, with the SEC separately authorizing charges relating to violations of securities laws.

SEC charges against Sam Bankman-Fried will be filed in SDNY

Gurbir S. Grewal, SEC Director, Division Of Enforcement, said: “We commend our law enforcement partners for working to secure the arrest of Mr. Sam Bankman-Fried in the Bahamas on federal criminal charges. The Securities and Exchange Commission has separately authorized charges relating to Mr. Bankman-Fried’s violations of our securities laws, which will be filed publicly tomorrow in the Southern District of New York.”

The Bahamas Prime Minister Davis stated: “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. While the United States is pursuing criminal charges against SBF individually, The Bahamas will continue its own regulatory and criminal investigations into the collapse of FTX, with the continued cooperation of its law enforcement and regulatory partners in the United States and elsewhere.”

Read this next

Digital Assets

Voyager subpoenas FTX’s inner circle over Alameda loan

Bankrupt crypto broker Voyager Digital, represented by law firm Kirkland & Ellis, is seeking court approval to subpoena Sam Bankman-Fried’s inner circle, as well as Alameda Research’s former executives.

Retail FX

AvaTrade seals sponsorship deal with F1’s Aston Martin team

Dublin-based forex broker AvaTrade today announced that it has concluded a sponsorship deal with Formula One’s Aston Martin Cognizant team that entails sponsorship rights and other marketing benefits.

Executive Moves

M4Markets onboards Invaxa CEO Marios Antoniou as COO

Seychelles-regulated brokerage firm M4Markets has appointed Marios Antoniou, who has a colorful career within the foreign exchange industry, in the capacity of its Chief Operations Officer.

Digital Assets

GK8 now allows clients to control their digital assets as they would their fiat

“As the institutional market is increasingly turning to self custody, our policy engine empowers them to automate transactions, approvals, and even crucial workflows, while providing the highest degree of security, consistency, governance and control.”

Digital Assets

Retail CBDCs in the UK: “Welcomed” by CryptoUK and R3, but “Dystopian” for ETC Group

“At this stage, we judge it likely that the digital pound will be needed in the future. It is too early to decide whether to introduce the digital pound, but we are convinced preparatory work is justified”, said the BoE and HM Treasury.

Institutional FX

Centroid taps Iress API to provide retail brokers with real-time market data

“It has always been a challenge to have an efficient, elegant solution for market data and order execution for retail brokers, but with Iress we have found absolutely the right partner to add to our client offering.”

Digital Assets

Ramp launches FCA-approved off-ramp product, onboards Brave, Trust Wallet, Ledger

“To obtain and maintain our FCA registration, we must meet and operate within their strict anti-money laundering and counter-terrorist financing standards. This is a huge achievement for us, as compliance is a cornerstone of our business and what we stand for.”

Institutional FX

State Street launches FIX API for Fund Connect ETF platform

“Expanding from proprietary APIs to the FIX industry standard will bring us closer to our goal of 100% digital interactions. This is another example of innovations we’ve brought to our operating model as we celebrate 30 years of servicing ETFs since the launch of SPY.”

Industry News

HollyWally opens office in Portugal to bring B2B2C wallet-as-a-service platform to Europe

“We looked at a number of centers for startups throughout Europe and were attracted straight away to Lisbon. There is great Government support and enthusiasm for startups, it’s well positioned between our Asian and US offices, it’s a cost-effective city in which to base a fintech and it’s a beautiful place.”

<