Former FTX CEO Bankman-Fried arrested in Bahamas after U.S. files charges

Dec 12 (Reuters) – (Editor’s note: This story contains language in paragraph 18 that some readers may find offensive)

FTX founder Sam Bankman-Fried was arrested in the Bahamas at the request of U.S. prosecutors on Monday, the day before he will testify before Congress about the brutal failure last month of one of the world’s largest exchanges. cryptocurrency in the world.

The arrest marks a stunning fall from grace for the 30-year-old entrepreneur widely known by his initials SBF, who took advantage of a boom in bitcoin and other digital assets to become a multi-billionaire until his swift demise from FTX.

The exchange, launched in 2019 and based in the Bahamas, filed for bankruptcy on November 11 after struggling to raise funds to avoid collapse as traders rushed to withdraw $6 billion from the platform in just 72 hours. Since then, it has emerged that Bankman-Fried secretly used $10 billion in client funds to support his business activity.

The arrest came as Bankman-Fried prepared to go after his former Sullivan and Cromwell attorneys, new FTX CEO John Ray and rival exchange operator Binance in a congressional hearing. .

In the testimony, a draft copy of which was seen by Reuters, Bankman-Fried planned to say he was pressured by lawyers for Sullivan and Cromwell to appoint Ray as CEO following the sudden exodus of client funds. And when within minutes he changed his mind, following an offer of billions of dollars in fresh funding, he was told it was too late.

Bankman-Fried will now not be able to testify, according to MP Maxine Waters, who said in a statement that she was surprised to learn of his arrest. Ray’s testimony will go forward.

Bankman-Fried was arrested shortly after 6:00 p.m. Monday (2300 GMT) at his apartment complex, a luxury gated community called Albany, and will appear in magistrate court on Tuesday, Bahamian police said. The Bahamas attorney general’s office said it expected him to be extradited to the United States.

A spokesperson for the U.S. Attorney’s Office in Manhattan confirmed that Bankman-Fried was arrested in the Bahamas, but declined to comment on the charges.

U.S. prosecutors said they have a sealed indictment against Bankman-Fried and the charges will be revealed on Tuesday. The New York Times reported that he faced charges of fraud and money laundering. The U.S. Securities and Exchange Commission separately cleared the charges related to Bankman-Fried’s violations of securities laws, the regulator said Monday.

Bankman-Fried and his attorney Mark Cohen did not immediately respond to requests for comment, nor did Sullivan and Cromwell, FTX, Ray and Binance.

Bankman-Fried said he did not believe he had any criminal liability. “I never tried to commit fraud,” Bankman-Fried said in a Nov. 30 interview at the New York Times’ Dealbook Summit.


FTX’s demise has sent shockwaves through an already battered cryptocurrency industry, which has seen a series of meltdowns this year that have taken down other key players including Voyager Digital and Celsius Network.

More trouble could be on the horizon for the industry. Reuters reported on Monday that some Justice Department prosecutors believe they have gathered enough evidence in their lengthy Binance investigation to indict the world’s largest cryptocurrency exchange and certain top executives.

A Binance spokesperson told Reuters for the article: “We have no idea of ​​the inner workings of the US Department of Justice, and it would not be appropriate for us to comment if we do.”

Bitcoin was stable at $17,150. It is down more than 60% this year.


Since the collapse of FTX, Bankman-Fried has given numerous media interviews to apologize for his mistakes and explain what happened at the company, which legal experts say could allow prosecutors to point out inconsistencies to undermine his credibility with a jury.

“The defense is going to be completely framed by SBF’s prior statements and the very incisive questions he answered in the press and on social media,” said criminal defense attorney and former federal prosecutor Renato Mariotti.

In his written testimony, Bankman-Fried repeated his mea culpa: “I would like to begin by formally declaring, under oath: I screwed up,” he wrote.

Then he launched into an explanation of how things went wrong at FTX and his hedge fund Alameda Research, while criticizing Sullivan and Cromwell and Ray as well as his big rival Binance for their actions while his company imploded.


Describing his decision to step down as CEO of FTX and appoint Ray, Bankman-Fried said he was coerced into doing so by Sullivan and Cromwell and the general counsel for FTX’s U.S. unit, who, according to him, was a former attorney at the law firm. .

Bankman-Fried said that less than 10 minutes after signing a document at 4:30 a.m. on Nov. 10 to make Ray CEO of FTX, he received “a potential multi-billion dollar funding offer.” Bankman-Fried said he told his attorney to rescind the CEO appointment minutes later, but was told it was already too late to do so.

Bankman-Fried said he has since been cut off from FTX’s systems and Ray has not responded to his emails offering help or other information.

Bankman-Fried, who had become a prominent and unconventional figure known for his wild hair, T-shirts and shorts during the crypto boom, said the fortunes of FTX and his trading company Alameda had rapidly declined this year as cryptocurrencies crashed amid rising interest rates.

At the end of 2021, he said Alameda had a net asset value of over $50 billion and manageable debt levels. This became unsustainable as digital assets dwindled.

“Last year, my net worth was valued at $20 billion,” Bankman-Fried wrote. “Last I saw, I believe my bank account had about $100,000 in it.”

Reporting by Jasper Ward in Washington, Luc Cohen and Jack Queen in New York, Brian Ellsworth in Miami and Angus Berwick in London; Editing by Megan Davies, Paritosh Bansal and Lincoln Feast

Our standards: The Thomson Reuters Trust Principles.

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