Disgraced FTX Founder Sam Bankman-Fried Arrested In The Bahamas
Sam Bankman-Fried, or SBF as he was affectionately known, was arrested yesterday evening at a luxury apartment complex in the Bahamas. The ex-billionaire could be extradited to the US to face charges of money laundering and fraud for his role in the failed crypto exchange, FTX.
Mr Bankman-Fried is being held in custody in line with the Bahamas’ Extradition Act. A sealed indictment and official charges are expected to be made public today, though the former FTX boss has said in recent interviews “I didn’t ever try to commit fraud.”
FTX Downfall
FTX was the third-largest cryptocurrency exchange at its peak with 1.2 million users and a valuation of $32 billion. The platform allowed individuals to trade fiat money for popular tokens like Bitcoin.
However, after concerns about the firm’s financial health surfaced online, customers flocked to withdraw $6 billion from the exchange in just three days. And after bail-out talks with Binance collapsed, FTX filed for bankruptcy on 11 November.
Recent court documents show that the company owes close to $3.1 billion to its 50 biggest creditors with experts doubtful that the majority of traders will get their money back.
It has since come to light that Mr Bankman-Fried siphoned off $10 billion in user funds to keep his trading company, Alameda Research, afloat. In essence, SBF stole money from his customers to fund bets made through his trading firm.
Congressional Hearing
Mr Bankman-Fried was due to answer for FTX’s failings before US Congress today.
But while his arrest may delay that meeting, a draft submission has surfaced online suggesting that the former CEO intended to claim that he was pressured by his lawyers, Sullivan and Cromwell, to make John Ray CEO during the FTX saga, and that when he subsequently received a funding offer of billions, he was told that he was unable to renegade on his nomination.
John Ray has been particularly critical of his predecessor in recent weeks, stating that the crypto exchange failed due to “a complete failure of corporate controls.”
Wall Street Regulators Close In
The Securities & Exchange Commission (SEC) has also said they will be pursuing Mr Bankman-Fried.
The US regulator commented yesterday: “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.”
Industry Headwinds Continue
Shockwaves from the FTX scandal continue to reverberate across the industry. Many still can’t believe the speed at which one of crypto’s greatest proponents, worth $15 billion as recently as October, has emerged as a penniless villain.
Cryptocurrencies have also had a rocky year. Bitcoin has fluctuated between $15,500 and $17,500 in the last couple of months, representing a significant decline from its close to $50,000 price tag in January of this year. Perhaps it’s no surprise then that many market commentators are asking; is Bitcoin dead?
