Instead of answering clumsy questions about how cryptocurrency exchanges work from members of Congress via video from the Bahamas on Tuesday, it looks like Sam Bankman-Fried (SBF) will instead be preparing to answer federal charges brought by the U.S. government.
The Attorney General of the Bahamas announced on Monday evening that the Royal Bahamas Police Force had arrested Bankman-Fried, the founder and former CEO of cryptocurrency company FTX whose career imploded along with his company over numerous allegations of fraud that sent FTX into bankruptcy.
"SBF's arrest followed receipt of formal notification from the United States that it has filed criminal charges against SBF and is likely to request his extradition," the Bahamas AG said. "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 AG said his government will now await the formal request for Bankman-Fried's extradition to the United States to face charges, and "intends to process it promptly, pursuant to Bahamian law and its treaty obligations with the United States."
Philip Davis, the Prime Minister of the Bahamas, said his country "and the United States have a shared interest in holding accountable all individuals associated with FTX who may have betrayed the public trust and broken the law. While the United States is pursuing criminal charges against SBF individually, The Bahamas will continue its own regulatory and criminal investigations into the collapse of FTX, with the continued cooperation of its law enforcement and regulatory partners in the United States and elsewhere," he added.
The timing for the arrest is potentially convenient for Bankman-Fried, at least in the short-term — the disgraced former CEO was scheduled to appear via video from the Bahamas before the House Committee on Financial Services Tuesday after agreeing to testify during the hearing seeking more information on the collapse of FTX. Bankman-Fried had been cagey about testifying, but finally said on Friday that he would answer lawmakers' questions.
The arrest by authorities in the Bahamas comes as reporting has noted the United States' work building a case against Bankman-Fried, with Mashable noting on Sunday that "U.S. federal prosecutors would very much like to know what happened too," in addition to lawmakers on Capitol Hill, "which is why there are now multiple investigations into FTX and its founder over allegations of fraud, manipulation, and more."
As Mashable summarized of the events since FTX imploded:
It has now been a month since FTX filed for bankruptcy. What was once one of the biggest crypto exchanges in the world crumbled in a matter of days following reports that its affiliated hedge fund, Alameda Research, was using FTX customer funds to make trades and was actually insolvent.
Billions in clients' money is lost and billions more has gone unaccounted for. So, people have asked, why is Sam Bankman-Fried, the founder — and, up until the collapse, CEO — of FTX, still a free man? Likely complicating the investigations is just how SBF and FTX's employees ran the business.
"Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here," said FTX's new CEO, John Ray III, who was appointed following the bankruptcy. It should be noted that Ray is the same individual who was brought in after Enron's collapse in 2001.
SBF has also been quite public with his version of what happened, sitting down for numerous interviews with mainstream media and even random crypto advocates in Twitter Spaces. SBF claims he didn't do anything improper and the collapse of his crypto empire was simply due to bad business decisions on his and his company's part.
While critics have poked holes in SBF's claims, it seems like we will soon officially know more about the alleged criminal activity SBF is believed to have taken part in.
Now that Bankman-Fried is in custody in the Bahamas where his extradition is being prepared, it seems his media tour is winding down and he'll need to focus on a defense to the allegations of fraud and other illegal acts that are looming large.
According to United States Attorney Damian Williams from the Southern District of New York, the government expects to unseal its charges against Bankman-Fried on Tuesday morning.