Sam Bankman-Fried, the founder of FTX, was arrested in the Bahamas on Monday at the request of US authorities, the day before he was scheduled to testify before Congress over the collapse of one of the biggest cryptocurrency exchanges in the world last month.
The 30-year-old entrepreneur, rode a surge in bitcoin and other digital assets to become a multi-billionaire before FTX’s quick death. His arrest is a dramatic turn of events.
The exchange, which was established in 2019 and is located in the Bahamas, filed for bankruptcy on November 11 as traders hurried to withdraw $6 billion from the platform in just 72 hours, making it difficult for it to raise money to avoid collapsing.
The arrest happened just as Bankman-Fried was getting ready to confront his former attorneys at Sullivan and Cromwell, the new CEO of FTX, John Ray, and rival exchange operator Binance in front of Congress.
Bankman-Fried intended to claim in his testimony that Sullivan & Cromwell attorneys forced him to propose Ray as CEO after the unexpected outflow of customer’s funds. And when he quickly changed his mind after being offered billions in new money, he was informed that it was too late.
Congresswoman Maxine Waters, who expressed surprise after hearing of Bankman-arrest, Fried’s said in a statement that he will no longer be allowed to testify.
According to Bahamian police, Bankman-Fried was detained at his apartment complex and will make his court appearance on Tuesday. He is anticipated to be transferred to the United States, according to the Bahamas attorney general’s office.
While confirming Bankman-arrest in the Bahamas, a spokesperson for the US Attorney’s office in Manhattan declined to comment on the charges.
US authorities claimed that Bankman-Fried was the subject of a sealed indictment, and that charges would be made public on Tuesday. According to the New York Times, Bankman-Fried is accused of fraud and money laundering. Bankman-violations Fried’s of securities laws were given separate authorization by the U.S. Securities and Exchange Commission, the regulator said on Monday.
Dwindling Crypto Industry
The collapse of FTX shocked the already bruised cryptocurrency market. Other major firms like as Voyager Digital and Celsius Network have also seen a series of crisis this year.
Justice Department investigators believe they have accumulated enough evidence in their extensive investigation into Binance to charge the world’s largest cryptocurrency exchange and several top executives, which may spell more difficulties for the crypto market.
As of writing, bitcoin was trading at $17,150. Bitcoin lost over 60% of its value in this year.