Bahamas detains FTX founder by US court order

Sam Bankman-Fried, 30, the cryptocurrency genius who became a millionaire overnight with FTX, his virtual money exchange company, and which fell just as quickly, was arrested Monday in the Bahamas .

Thomas Osborne
Thomas Osborne
12 December 2022 Monday 23:46
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Bahamas detains FTX founder by US court order

Sam Bankman-Fried, 30, the cryptocurrency genius who became a millionaire overnight with FTX, his virtual money exchange company, and which fell just as quickly, was arrested Monday in the Bahamas . His arrest came at the request of the chief prosecutor for the Southern District of New York.

The actions of the Bahamas authorities took place after receiving the accusation formulated from the prosecutor's office in Manhattan and now the process for the defendant's extradition for the collapse of the company he founded is open.

Bankman-Fried has been under investigation by the Department of Justice for the sudden collapse of FTX, a company that was valued at 32,000 million dollars and that requested suspension of payments on November 11.

His arrest is the first concrete step by regulators to hold individual accountable for the FTX implosion, which already led to Bankman-Fried being forced to step down as CEO of the platform.

Damian Williams, attorney general of the aforementioned district of Manhattan, stated in a statement that he already anticipated the opening of the process in the morning and that, hours later, "the authorities of the Bahamas arrested Samuel Bankman-Fried at the request of the US government." nuanced.

His colleague in the Caribbean country, Ryan Pinder, pointed out that the United States had filed unspecified criminal charges against Bankman-Fried and the request for his transfer. "We have proceeded to arrest him after receiving a formal request from the United States," he added. Everything points to an investigation for fraud and fraud, indicated legal sources.

These legal experts noted that if the case goes to trial and results in conviction, Bankman-Fried could face a life sentence with the possibility of a release review. This punishment would be unusual, but not extraordinary. Bernie Madoff, the architect of the great scam for a Ponzi scheme (pyramid scheme to attract investors with which to pay previous investors), and with which the now detainee is compared, received a sentence of 150 years in prison.

The lawyers involved in the case expressed their surprise at the suddenness of the news, which came the day before SBF, his initials by which he is known, appeared on Tuesday before the financial services commission of the lower house of the US Congress. USA

“The Bahamas and the United States share an interest in holding accountable individuals associated with FTX who may have betrayed public trust and broken the law,” Bahamian Prime Minister Philip Davis said in a statement. FTX had its registered office in that country.

"While the United States files criminal charges against SBF individually, The Bahamas will continue its own regulatory and criminal investigations into the collapse of FTX, with the cooperation of law enforcement and partner regulators in the United States and elsewhere," the statement continued. Prime Minister.

John J. Ray III, who already oversaw the Enron disaster, replaced Bankman-Fried to try to bring order and save as much investor money as possible. Ray is also due to testify in Congress this week. In a preview of his keynote speech, released on Monday, Ray maintains that FTX decided to spend without control from the end of 2021 and until 2022 with approximately 5,000 million paid by a multitude of businesses and investments, “many of which were worth a fraction of what was paid for them”.

He noted that client funds were mixed with assets from Alameda Research, the hedge fund also founded by SBF. Alameda used client funds to operate on the margin, exposing them to massive losses. This is the main element regarding the possible imputation for fraud.

Considered the golden boy of the crypto industry, a major donor to the Democratic Party and the ideologue of a new, more humane philanthropy, as he was described until a few weeks ago, Bankman-Fried saw his business and political empire fall like a rock. house of cards, at astonishing speed.

FTX's problems began in early November when an $8 billion hole in the company's accounting was discovered. Bankman-Fried sought the lifeline from a rival company, the giants Binance. But the deal proved impossible once Binance examined FTX's financials. This platform collapsed, marking the most notable drop in an industry that has been experiencing a season of heavy losses, with several companies having to resort to bankruptcy to try to meet debts.