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.”

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