Sam Bankman-Fried, head of the cryptocurrency-exchange company that collapsed last month, was reportedly arrested on Monday in the Bahamas at the request of the U.S. government.
The Royal Bahamas Police Force took the failed financial tech entrepreneur into custody after the U.S. filed criminal charges against him, according to a press statement. FTX, which Bankman-Fried founded, imploded in November, costing investors millions of dollars in losses. The fallen businessman has been accused of misusing customer funds deposited with FTX to artificially prop up another one of his enterprises: a crypto hedge fund, Alameda Research, which he operated simultaneously while seemingly evading financial ethics scrutiny.
“As a result of the notification received and the material provided therewith, it was deemed appropriate for the Attorney General to seek SBF’s arrest and hold him in custody pursuant to our nation’s Extradition Act,” the statement read. “At such time as a formal request for extradition is made, The Bahamas intends to process it promptly, pursuant to Bahamian law and its treaty obligations with the United States.”
Damian Williams, the U.S. Attorney for the Southern District of New York, updated in a tweet that on Tuesday the office will likely move to unseal the indictment it filed against Bankman-Fried.
While the U.S. pursues prosecution against Bankman-Fried, the Bahamas will also simultaneously investigate the crash of FTX on both the regulatory and criminal fronts, the prime minister of the country said.
It is alleged that Bankman-Fried secretly transferred ten billion dollars of FTX customer funds to Alameda, which reportedly had to scramble to pay lenders back as crypto prices began plummeting. To cover the debts, Alameda allegedly stole FTX customer funds, exposing a lack of assets and a severe liquidity crunch. Last month, FTX filed for bankruptcy and the former billionaire, whose fortune evaporated almost overnight, resigned as CEO.
Bankman-Fried said at a New York Times’ Dealbook Summit in late November with Andrew Ross Sorkin that he did not “knowingly co-mingle funds” between Alameda and FTX. The thirty-year-old assured he is innocent of the fraud and didn’t launder FTX monies to support his sister trading firm.