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FTX founder Sam Bankman-Fried arrested in the Bahamas

FTX founder Sam Bankman-Fried was arrested Monday in the Bahamas, according to the Southern District of New York which is investigating the failed cryptocurrency's chief executive officer. Photo by Cointelegraph/Wikimedia Commons
FTX founder Sam Bankman-Fried was arrested Monday in the Bahamas, according to the Southern District of New York which is investigating the failed cryptocurrency's chief executive officer. Photo by Cointelegraph/Wikimedia Commons

Dec. 12 (UPI) -- Sam Bankman-Fried, the founder and former chief executive officer of failed cryptocurrency exchange FTX, was arrested Monday in the Bahamas, according to the Southern District of New York which is investigating Bankman-Fried.

"Earlier this evening, Bahamian authorities arrested Samuel Bankman-Fried at the request of the U.S. government, based on a sealed indictment filed by the SDNY," U.S. Attorney Damian Williams tweeted Monday evening.

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"We expect to move to unseal the indictment in the morning and will have more to say at that time," Williams added.

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Bankman-Fried was arrested at his Albany resort apartment, located in Nassau, Bahamas, Monday evening. He was taken into custody "without incident," according to Royal Bahamas Police Force and will appear in Magistrate Court, Nassau, Bahamas, on Tuesday. Bankman-Fried is expected to be extradited to the United States.

While it is not clear what charges he will face, The New York Times reports the criminal charges against Bankman-Fried include wire fraud, wire fraud conspiracy, securities fraud, securities fraud conspiracy and money laundering, according to a person with knowledge of the matter.

"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," Bahamas Prime Minister Philip Davis said in a statement.

"While the United States is pursuing its own criminal charges against SBF individually, the Bahamas will continue its own regulatory and criminal investigations into the FTX collapse, with continued cooperations of its law enforcement and regulatory partners in the United States and elsewhere."

Bankman-Fried, 30, had been scheduled to appear virtually Tuesday before the U.S. House Financial Services Committee on the collapse of his crypto exchange. The committee is demanding answers about what lead to FTX's downfall after the company lost liquidity and filed for bankruptcy last month, leaving close to a million users unable to access their funds.

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"The fall of FTX has posed tremendous harm to over 1 million users," Rep. Maxine Waters, D-Calif., said in a statement last month, "many of whom were everyday people who invested their hard-earned savings into the FTX cryptocurrency exchange, only to watch it all disappear within a matter of seconds."

While Bankman-Fried agreed to testify before the committee, he claimed on Friday he lacked access to data related to FTX.

"I still do not have access to much of my data -- professional or personal. So there is a limit to what I will be able to say, and I won't be as helpful as I'd like," Bankman-Fried wrote in a series of tweets.

Both the House and the Senate have requested testimony from Bankman-Fried about his role in the collapse of FTX.

On Wednesday, Sen. Sherrod Brown, D-Ohio, sent the former FTX CEO a request for testimony before the Senate committee on banking, housing and urban affairs, but Bankman-Fried did not respond.

The Justice Department has also requested an independent review of the collapse of FTX.

John Ray III, who replaced Bankman-Fried as FTX CEO last month, is conducting an internal investigation into the company's downfall. Ray previously oversaw the return of some investor assets during the liquidation of Enron.

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FTX was the world's second-largest cryptocurrency trading platform until it was revealed that it lacked funds to match investments.

"Never in my career have I seen such a complete failure of corporate controls," Ray wrote in FTX's bankruptcy filing, "and such a complete absence of trustworthy financial information as occurred here."

In an interview with the BBC over the weekend, Bankman-Fried said he "didn't knowingly commit fraud."

"I didn't want any of this to happen. I was certainly not nearly as competent as I thought I was."

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