The disgraced ex-CEO of FTX Sam Bankman-Fried has been arrested in the Bahamas, according to a statement from the Royal Bahamas Police Force.
Bankman-Fried, also known as SBF, was arrested following “receipt of formal notification from the United States that it has filed criminal charges against SBF and is likely to request his extradition,” a statement read.
The US Attorney’s Office for the Southern District of New York confirmed the request in a statement via Twitter.
USA Damian Williams: 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. We expect to move to unseal the indictment in the morning and will have more to say at that time.
— US Attorney SDNY (@SDNYnews) December 12, 2022
“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,” it said. “We expect to move to unseal the indictment in the morning and will have more to say at that time.”
Bahamas Police confirmed in a statement shared with Decrypt that law enforcement arrested Bankman-Fried, without incident, at 6 p.m. at his apartment complex in Albany. SBF’s arrest resulted from “various financial offences against laws of the United States, which are also offences against laws of the Commonwealth of The Bahamas,” the statement read.
Bankman-Fried was due to speak to lawmakers in Washington, D.C. tomorrow about the collapse of the digital asset exchange after agreeing to testify before a House Financial Services Committee but declining an invitation from the Senate.
It isn’t yet known what charges U.S. authorities plan to bring against Bankman-Fried, but legal experts tell Decrypt it’s likely to be some combination of bank and wire fraud. The Bahamas has an extradition treaty with the United States.
FTX went bust last month after allegedly mixing funds from the exchange with its trading house, Alameda Research—which was also founded by SBF.
When users of the exchange got light of mismanagement, they tried to withdraw funds from FTX, which led to a bank run on the exchange. FTX was then forced to admit that it did not hold one-to-one reserves of customer assets and later filed for bankruptcy.
The company’s new CEO, John J. Ray III, an experienced insolvency lawyer who helped Enron following its meltdown, today said the FTX collapse was caused by “a very small group of grossly inexperienced and unsophisticated individuals.”
The comments came in the form of prepared testimony that Ray plans to deliver to the House Financial Services Committee tomorrow morning. In that testimony, Ray lays out precisely what went wrong with FTX and its sister company Alameda, including the commingling of funds, the absence of reliable financial statements, and the “use of computer infrastructure” that gave senior people at the company access to customer assets.
Alameda also had the unchecked ability to borrow funds on FTX to use for its own purposes, according to Ray.
Editor's note: This story was updated after publication to include additional details regarding the arrest of Sam Bankman-Fried.